Who brought Rao's stake in Orchid down

Even as the obscure Solrex Pharmaceuticals, believed to be backed by the Ranbaxy promoter group, picked up more than 12 per cent equity in Orchid Pharma yesterday, it now emerges that Religare, another Ranbaxy group company, had liquidated its share holding in Orchid Pharma in mid-March.

The shares, which Religare had acquired by funding Orchid Pharma promoter K Raghavendra Rao, were sold around the same time as a similar sale by Indiabulls, another investment company.

Together, the transactions led to Rao's holding falling from 24 per cent to 17 per cent, making Orchid vulnerable to a takeover bid in the process.

The challenge that Rao faces now revolves around these share sales.

Orchid has attributed these equity sales to margin calls by Religare and Indiabulls.

However, given that the move by Religare and Indiabulls was followed by Solrex Pharma picking up over 12 per cent (in several transactions) in Orchid, experts opine the moves were made in tandem.

Ranbaxy has remained silent on rumours linking its promoters to Solrex. On Orchid's behalf, Deputy Managing Director C B Rao said, "We do not find anything special in this development. The shares have been picked up by a financial investment company. Although they have picked up more shares than they usually do, I believe it has been a value pick. The shares of Orchid came cheap, and they lapped them up. It should stop there as reflected by the price movement in Orchid stock yesterday. Let us not read more into this."

An Orchid spokesperson added that Religare, though a Ranbaxy promoter group company, had no connection with the transactions that led to margin call and subsequent sale of shares.

"Religare had a stake of about 2.5 per cent. The sale of those shares was an immediate response to the market situation and has nothing to do with Solrex or Ranbaxy. Orchid had pledged its shares with Religare as it is an independent investment firm. Religare must have similar investments in several other pharma companies. That does not mean their promoter group, that is Ranbaxy, is up to acquire all those firms," he said.

Religare CEO Sunil Godhwani has categorically denied any links with Solrex and said that Orchid was one among its hundreds of customers.