MIRA INFORM REPORT

Report Date :

22.03.2007

IDENTIFICATION DETAILS

Name :	ORCHID CHEMICALS AND PHARMACEUTICALS LIMITED
Registered Office :	‘Orchid Towers’, 313 Valluvar Kottam High Road, Nungambakkam, Chennai- 600 034, Tamilnadu, India
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	01.07.1992
Com. Reg. No.:	18-22994
CIN No.: [Company Identification No.]	L24222TN1992PLC022994
TAN No.: [Tax Deduction & Collection Account No.]	CHEO03079G/CHEO00121C
Legal Form :	Subject is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers and Sellers of Pharmaceutical Products and Bulk Drugs.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 31000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company doing very well. Available information indicates high financial responsibility of the company. Financial position is good. Payments are correct and as per commitments. The company can be considered good for any normal business dealings. It can be regarded as a promising business partners in a medium to long-run.

LOCATIONS

Registered Office :	‘Orchid Towers’, 313 Valluvar Kottam High Road, Nungambakkam, Chennai- 600 034, Tamilnadu, India
Tel. No.:	91-44-2825 1532 / 2825 1547 / 2828 4776
Fax No.:	91-44-2828 4983
E-Mail :	orchid@giasmd01.vsnl.net.in corporate@orchidpharma.com
Website :	http://www.orchidpharma.com
Head Office :	‘Orchid Towers’, 152, Village Road, Nungambakkam, Chennai – 600 034, Tamilnadu, India
Factory 1 :	API FACILITIES Alathur Works Plot Nos. 85-87, 98-100, 126-131, 138-151 and 159-164, SIDCO Industrial Estate, Alathur, Kancheepuram Dist. – 603 110, Tamilnadu, India Aurangabad Works L-8 & L-9, MIDC Industrial Area, Waluj, Aurangabad Dist.– 431 136, Maharashtra, India FORMULATIONS Plot Nos. A-10, A-11, SIDCO Industrial Estate, Alathur, Kancheepuram Dist. – 603 110, Tamilnadu, India B3 & B4, B11 to B14, SIDCO Industrial Estate, Alathur, Kancheepuram Dist. – 603 110, Tamilnadu, India B77, SIDCO Industrial Estate, Alathur, Kancheepuram District – 603 110, Tamilnadu Plot Nos. B3-B6, B11 & B14 SIPCOT Industrial Park, Irungattukottai, Sriperumbudur – 602 105, Tamilnadu Vinay Bhavya Complex, No. 159A, I Floor, ‘A’ Wing, C S T Road, Kalina, Santacruz, Mumbai – 400 098, Maharashtra
R & D Centre :	Ø Plot No. 476 / 14, Old Mahabalipuram Road, Sholinganallur, Chennai – 600 119, Tamilnadu Ø Plot No. B21-B23 and B31-B33, SIPCOT Industrial Park, Irungattukotti Sriperumbudur (TK.)- 602 105, Kancheepuram District, Tamilnadu, India

DIRECTORS

Name :	Mr. R. Narayanan
Designation :	Chairman
Name :	Mr. K. Raghavendra Rao
Designation :	Managing Director
Date of Birth/Age :	44 years
Qualification :	B.Com., PGDM (IIM-A), ACS, AICWAI
Experience :	24 years
Date of Appointment :	13.07.1992
Previous Employment :	Al Buraimi Group, Sultanate of Oman, Director
Name :	Dr. C. Bhaktavatsala Rao
Designation :	Deputy Managing Director
Date of Birth/Age :	53 years
Qualification :	B.E., M. Tech., Ph. D.
Experience :	29 years
Date of Appointment :	19.08.1998
Previous Employment :	Ashok Leyland Limited, Deputy General Manager – Corporate Planning
Name :	Dr. I. Seetharam Naidu
Designation :	Director
Name :	Mr. Subramanian Andi
Designation :	Director (IDBI Nominee)
Name :	Mr. Anil Thadani
Designation :	Director
Name :	Dr. Francis Pinto
Designation :	Director

KEY EXECUTIVES

MANAGEMENT TEAM

Shri D S Bhaskara Raju - President - Finance & Business Planning Dr Gautam Kumar Das - President - Active Pharmaceutical Ingredients Dr Sumant Baukhandi - President - Regulatory Affairs & Quality Assurance Ms Edna Braganza - Senior Vice President - International Marketing & Procurement Shri Kalidindi V Raju - Senior Vice President - Manufacturing Shri S Mani - Senior Vice President - Manufacturing Shri Ashutosh Ojha - Country Head (Domestic Formulations) Shri L Chandrasekar - Vice President - Internal Audit & Co. Secretary Shri P N Deshpande - Vice President - Production & Technical Shri C R Dwarakanath - Vice President - Corporate Safety, Health & Environment Shri Imtiyaz Basade - Vice President - Regulatory Affairs Shri S Krishnan - Vice President - Finance Dr S Mahender Rao - Vice President - Chemical Development Shri Makarand M Deshpande - Vice President - International Marketing Shri S Nammalvar - Vice President - Projects & Engineering Services Shri K C Pathak - Vice President - PPIC & Outsourcing Dr Praveen Reddy - Vice President - Pharma Research Shri K Ramesh - Vice President - Analytical Development Shri M S Rangesh - Vice President - Human Resources Shri Satish Haribhau Joshi - Vice President - Quality Assurance Dr U P Senthil Kumar - Vice President - Chemical Development Shri Umesh D Kapre - Vice President - Manufacturing

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters' holdings
Promoters
Indian Promoters	11494173	17.79
Non- Promoter’s holdings
Institutional Investors
Mutual Funds and UTI	2932878	4.54
Banks, Financial Institutions and Insurance Companies	4326731	6.70
Foreign Institutional Investors	15275218	23.64
Others
Private Corporate Bodies	2229992	3.45
Resident Individual	9101064	14.08
NRIs	360309	0.56
OCBs	1350	0.00
Foreign Companies	18881467	29.22
Foreign Collaborators	15000	0.02
GRAND TOTAL	64618182	100.000

BUSINESS DETAILS

Line of Business :

Manufacturers and Sellers of Pharmaceutical Products and Bulk Drugs.

Products :

Item Code No. (ITC Code)	Product Description
2941.10	Bulk Cephalosporins
2941.90	Bulk Cephalosporins
2942.00	Other Bulk Drugs

Brand Names :

The company sells its products under the brand name "Tax-o-Bid", "Cefogram", "Orzid", "Spizef", "N-Lid DT", "N-Lid Gel", "N-Lid Suspension" and "Orchidol".

PRODUCTION STATUS

Particulars	Unit	Licensed Capacity	Installed Capacity
Bulk Drugs and Intermediates
Oral and Sterile	MT	900	800
Formulations	No. Millions	748	748

GENERAL INFORMATION

Bankers :

v Bank of India

v Canara Bank

v Citibank N. A.

v Export-Import Bank of India

v ICICI Bank Limited

v IDBI Bank Limited

v Indian Bank

v Punjab National Bank

v State Bank of India

v Union Bank of India

v Bank of Baroda

v Allahabad Bank

v Federal Bank

v State Bank of Indore

v UTI Bank Limited

Facilities :

SECURED LOANS	31.03.2006
From Banks
Rupee Term Loans	4606.705
Rupee & Foreign Currency Packing Credit & Advance against Bills	3058.839
From Financial Institutions
Rupee
Term Loans	590.625
Hire Purchase Finance	9.406
Total	8265.585
Unsecured Loan
From Banks	850.000
Foreign Currency Convertible Bonds	1166.902
Total	2016.902

Banking Relations :	Good
Auditors :
Name :	STATUTORY AUDITORS SNB Associates Chartered Accountants No. 12, 3^rd Floor, Gemini Parsn Complex, 121, Anna Salai, Chennai – 600 006, Tamil Nadu COST AUDITORS Mr. V. Kalyanaraman Cost Accountants No. 4 (Old No. 12), Second Street, North Gopalapuram, Chennai – 600 086, Tamilnadu INTERNAL / US GAAP AUDITORS Deloitte Haskins & Sells Chartered Accountants 476, Temple Towers, 2^nd Floor, Nandanam, Chennai – 600 035, Tamilnadu
Memberships :	Nil
Collaborators :	Nil
Associates :	Orchid Research Laboratories Limited
Subsidiaries:	v Orchid Europe Limited, UK ( Previously known as Orchid Nutricare Limited) v Ogna Farma, Brazil v Gene Arrays Inc., USA v Orchid Pharmaceuticals Inc., USA

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
9,00,00,000	Equity Shares	Rs. 10/- Each	Rs. 900.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
6,46,18,182	Equity Shares	Rs. 10/- Each	Rs. 646.182 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		646.182	341.300	323.800
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		7204.071	4371.400	3863.200
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		7850.253	4712.700	4187.000
LOAN FUNDS
1] Secured Loans		8265.585	8216.300	7101.900
2] Unsecured Loans		2016.902	1650.000	500.000
TOTAL BORROWING		10282.487	9866.300	7601.900
DEFERRED TAX LIABILITIES		800.600	0.000	0.000
TOTAL		18933.340	14579.000	11788.900
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		8898.985	6952.700	7020.100
Capital work-in-progress		2691.740	3438.400	1484.200
INVESTMENT		982.369	712.600	523.100
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4380.772	3935.400	2742.800
	Sundry Debtors	3288.153	1978.000	1502.700
	Cash & Bank Balances	112.959	202.700	215.200
	Other Current Assets	5.074	0.000	0.000
	Loans & Advances	980.351	1215.400	746.700
Total Current Assets		8767.309	7331.500	5207.400
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	2407.063	3656.100	2274.700
	Provisions	0.000	200.100	171.200
Total Current Liabilities		2407.063	3856.200	2445.900
Net Current Assets		6360.246	3475.300	2761.500
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		18933.340	14579.000	11788.900

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		8734.571	6776.670	7585.200
Other Income		13.273	8.223	0.000
Total Income		8747.844	6784.893	7585.200
Profit/(Loss) Before Tax		906.117	289.080	329.700
Provision for Taxation		77.100	21.033	19.500
Profit/(Loss) After Tax		829.017	310.113	310.200
Earnings in Foreign Currency :
	Export Earnings	6210.136	5200.432	0.000
	Other Earnings	10.710	14.030	0.000
Total Earnings		6220.846	5214.462	5315.430
Imports :
	Raw Materials	2133.873	2363.483	--
	Stores & Spares	323.250	204.308	--
	Capital Goods	129.875	271.573	--
Total Imports		2586.998	2839.364	2575.623
Expenditures :
	Cost of Goods Sold	3452.651	2956.255	0.000
	Manufacturing Expenses	2689.187	2197.539	0.000
	Interest	870.132	723.100	0.000
	Depreciation & Amortization	829.757	618.919	0.000
	Other Expenditure	0.000	0.000	7255.500
Total Expenditure		7841.727	6495.813	7255.500

QUARTERLY

PARTICULARS	30.06.2006 (1^st Quarter)	30.09.2006 (2^nd Quarter)	31.12.2006 (3^rd Quarter)
Sales Turnover	2017.100	2457.300	2387.300
Other Income	7.800	2.200	2.600
Total Income	2024.900	2459.500	2389.900
Total Expenditure	1437.000	1679.200	1608.900
Operating Profit	587.900	780.300	781.000
Interest	220.300	255.900	264.400
Gross Profit	367.600	524.400	516.600
Depreciation	193.200	200.900	203.800
Tax	3.500	4.000	4.600
Reported PAT	145.900	294.500	283.200

200606 Quarter 1 - Expenditure Includes (Increase)/Decrease in stock in Trade Rs (334.894) million Consumption of Raw Materials Rs 1050.696 million Staff Cost Rs 171.767 million Other Expenditure Rs 549.412 million Tax Includes Provision for Deferred Tax Rs 25.00 million Fringe Benefit Tax Rs 3.50 million EPS is Basic Status of Investor Complaints for the quarter ended June 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 15 Complaints disposed off during the quarter 15 Complaints unresolved at the end of the quarter Nil 1. The above financial results were taken on record by the Board of Directors at its meeting held on July 27, 2006. 2. The Company's increasing level of exports to regulated markets is in the form of finished dosage forms (formulations) which utilised the Company's active pharmaceutical ingredients (bulk drugs). In view of the integration of bulk actives and formulations business segment, the Company considers the business as one integrated business of Pharmaceuticals Products and hence no separate segmental reporting is provided. 3. The standalone accounts have been subjected to Limited Review by the Statutory Auditors. 4. The Allotment committee of the Board has allotted shares as follows: - 4,14,744 and 7,37,325 equity shares on April 18, 2006 and April 28, 2006 on conversion of US$ 2,250,000 and US$ 4,000,000 Zero Coupon FCCBs respectively. - 3,475 shares (2250 shares at an adjusted price of Rs 162.24/- per share and 1225 Shares at an adjusted price at Rs 168/- per share) to employees under ORCHID ESOP 1999 Scheme on April 28, 2006. - 35,000 equity shares at an adjusted price of Rs 226.28/- to Promoter / Promoter group(s) on May 31, 2006 on conversion of warrants. - 3015 shares (600 shares at an adjusted price of Rs 162.24/- per share, 1177 shares at an adjusted price of Rs 168/- per share an 1238 shares at anadjusted price of Rs 200.44/- per share) to employees under ORCHID ESOP 1999 Scheme, on May 31, 2006. 5. Figures for the previous periods have been regrouped wherever necessary.

200609 Quarter 2 - EPS is Basic Status of Investor Complaints for the quarter ended September 30, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 21 Complaints disposed off during the quarter 21 Complaints unresolved at the end of the quarter Nil 1. The above financial results were taken on record by the Board of Directors at its meeting held on October 19, 2006. 2. The Company is operating in single segment (i.e.)'Pharmaceuticals'. 3. The above stand-alone results have been subjected to limited review by the Statutory Auditors. 4. During the quarter a wholly owned subsidiary Orchid Pharmaceuticals (South Africa)(PTY) Limited. was incorporated. 5. In accordance with the revised AS 15, necessary provision has been made for the employee benefit during the period. The increase in liability as at the commencement of the year as per revised AS 15 will be adjusted against the reserves in accordance with the said standard. 6. The Board has approved the acquisition of the balance shares in Bexel Pharmaceuticals Inc, USA to make it a wholly owned subsidiary. The Board also approved winding up of Gene Arrays Inc., USA, subsidiary and BchD Biotechnological Chemical Development Limited, UK, a Joint venture company. 7. The Compensation Committee of the Board at its meeting held on August 12, 2006 approved -The issue of 610000 stock options to employees under Orchid ESOP 2005 scheme. The stock options are convertible into equity shares of Rs 10/- each at a price of Rs 193.25 per share. -The re-pricing of 300000 options granted on April 28, 2006 at a price of Rs 193.25 per share, subject to the shareholders' approval and other consents as may be required. 8. The Allotment Committee of the Board at its meeting held on October 19, 2006 has allotted 4000 shares to employees at a price of Rs 200.44 per share. 9. Previous periods / year figures have been regrouped wherever necessary.

200612 Quarter 3 - Expenditure Includes (Increase)/Decrease in stock in Trade Rs (346.105) million Consumption of Raw Materials Rs 1024.207 million Staff Cost Rs 192.401 million Other Expenditure Rs 738.396 million Tax Includes Provision for Deferred Tax Rs 25.00 million Fringe Benefit Tax Rs 4.60 million EPS is Basic Status of Investor Complaints for the quarter ended December 31, 2006 Complaints Pending at the beginning of the quarter Nil Complaints Received during the quarter 19 Complaints disposed off during the quarter 19 Complaints unresolved at the end of the quarter Nil 1. The above financial results were taken on record by the Board of Directors at its meeting held on January 19, 2007. 2. The Company is operating in single segment (i.e.) Pharmaceuticals. 3. The above stand-alone results have been subjected to limited review by the Statutory Auditors. 4. The Allotment Committee of the Board have allotted shares to employees under ORCHID-ESOP 1999 Scheme as follows: -4,000 shares at an adjusted price of Rs 200.44 per share on October 19, 2006. -550 shares at an adjusted price of Rs 168 per share on January 19, 2007. 5. During the quarter the balance shares in Bexel Pharmaceuticals Inc. USA, were acquired by the company's wholly owned subsidiary. 6. Previous periods / year figures have been regrouped wherever necessary.

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	1.60	1.96	1.65
Long Term Debt Equity Ratio	1.10	1.22	0.99
Current Ratio	1.19	0.97	0.94
TURNOVER RATIOS
Fixed Assets	0.79	0.72	0.84
Inventory	2.14	2.06	2.66
Debtors	3.38	3.96	6.05
Interest Cover Ratio	2.04	1.40	1.54
Operating Profit Margin (%)	29.32	23.66	21.09
Profit Before Interest and Tax Margin (%)	19.98	14.68	13.13
Cash Profit Margin (%)	18.66	13.48	12.32
Adjusted Net Profit Margin (%)	9.33	4.50	4.35
Return on Capital Employed (%)	10.86	7.68	8.60
Return on Net Worth (%)	13.20	6.97	7.56

STOCK PRICES

Face Value	Rs.10/-
High	Rs.257.80/-
Low	Rs.251.25/-

LOCAL AGENCY FURTHER INFORMATION

HISTORY

The company was incorporated on 1^st July 1992 at Chennai in Tamil Nadu having Company Registration Number 22994. The company obtained Certificate of Commencement of Business on October 15, 1992

Subject was promoted by Mr. Kailasam Raghavendra Rao in 1992 as 100% Export Oriented Unit for manufacture of antibiotics like oral cephalosporins & cephalexin.

In 1994-95, it introduced oral products, cephtadrine. The company expanded capacity to 300 tons / annum and set up a sterile cephalosporin unit in 1995-96. Over the years the company expanded the range of sterile cepholosporins and increased the capacity to 700 tons / annum.

In 1998-99, the company diversified into formulations by setting up a separate division by the name of Orchid Healthcare. Once again in FY2000 the company diversified into neutraceuticals and set up separate company Orchid Nutricare.

In December 1999, the company issued 10653192 equity shares on private placement basis to foreign companies incorporated in Mauritius belonging to Schroder Ventures Group.

In March 2001, The Foreign Investment Promotion Board declared a proposal of the company to issue $ 30 millions worth Foreign Currency Convertible Bonds (FCCBs) through private placement to International Finance Corporation (IFC), Washington, USA.

Orchid Nutricare was established in U.K. as a joint venture to market certain nutraceutical products, which has become the wholly owned subsidiary of the company.

During the year 2001, a separate exclusive plant for manufacturing of nutraceutical formulations was set up in Alathur with a capacity to produce 100 million tablets per annum. The Aurangabad unit was completely upgraded to meet good manufacturing practices and other international standards. The company is establishing US FDA compliant facilities for sterile and nonsterile cephalosporins bulk actives at Alathur, which will be commissioned by October 2002.

The company has established 50:50 joint venture in the USA for new drug discovery with Bexel Biotechnology Inc. A new company by name Bexel Pharmaceuticals Inc. is now operational in California. A total of US$ 8 millions cash in equity was provided by the company for this joint venture. The new company will mainly focus on Metabolic and autoimmune diseases including diabetes, inflammation and cardiovascular diseases.

The company is taking initiatives to establish a manufacturing and marketing joint venture in China, which represents a major market for anti-infectives. The total outlay of the project would be USD 25 million at a capacity of 300 MT of sterile cephalosporin products at its peak capacity.

Its’ products range includes :-

Ø Oral Cepholosporin :

Cephalexin

Cephradine

Cefuroxime Axetil

Cefixime

Ø Sterile Cepholosporin :

Ceftriaxone

Cefotaxime

Ceftazidime

Cefazolin

Cephradine

Cefoperazone

Cefuroxime

Ceftiofur

Ø Others

Sildenafil Citrate

Lansoprazole

It is in trade terms with :-

Ø Abasi Engineering Works

Ø Ag Filters

Ø Arvind Pipes & Fittings Industries

Ø Aditya Better Containers Private Limited

Ø Anant Company

Ø Atoz Pharmaceuticals Private Limited

Ø Ammonia Marketing Company

Ø B. K. Equipments Private Limited

Ø Cee Kay Electricals

Ø Biotrans Pharmaceuticals (Private) Limited

Ø D. Parikh Engineering Works

Ø Dr. Hedgewar Rugnalaya

Ø Eltech Engineers Madras Private Limited

Ø Grand Polycoats Company Private Limited

Ø Hyderabad Ammonia & Chemicals Private Limited

Ø Hi-Fab Engineers Private Limited

Ø GP Fitwell Systems Private Limited

Ø Elder Instruments Private Limited

Ø Industrial Fabrics (Chennnai)

Ø Jasmine Art Printers Private Limited

Ø Corosynath Services Private Limited

Ø Mayura Analytical Private Limited

Ø Mysore Ammonia Private Limited

Ø Inject ampoules Private Limited

Ø Jay Dheep Techno Enterprises Private Limited

Ø Joseph Leslie & Company

Ø Maral Labs

Ø Millipore (India) Private Limited

Ø N. K. Joshi & Company

Ø Parishram Engineering Works

Ø Praktan Industries

Ø Prafab Engineers Private Limited

Ø R. Stahl (Private) Limited

Ø Ramsons Garment Finishing Equipment

Ø Rockwin Flowmeter India Private Limited

Ø Safex Fire Services Limited

Ø Southern Gasket Products

Ø Supreme Chemiplast Piping Private Limited

Ø Trans Electris

Ø Uniflow

Ø Up-Datar Services

Ø Atra Pharmaceuticals Limited

Ø Ceekay Electricals

Ø Eltech Engineers Madras Private Limited

Ø Hemson Private Limited

Ø Mihir Engineers Limited

Ø Manali Lubricants Private Limited

Ø R P Products

Ø Futura Electronics Private Limited

The company’s fixed assets of important value include freehold land & site development, leasehold land, buildings, plant & machinery, factory equipment, laboratory equipment, office equipment, furniture & fittings and vehicles.

Performance:

 During the year under review the Company achieved a turnover and operating income of Rs.8887.700 Millions compared to Rs.6892.900 Millions in the previous fiscal year 2004-05, registering an increase of 29%. Gross profit before interest, depreciation and taxes in 2005-06 was substantially higher at Rs.2606.000 Millions compared to Rs.1631.100 Millions in the previous fiscal. 

 After providing for interest of Rs.870.100 Millions (Rs.723.100 Millions previous fiscal) and depreciation of Rs.829.800 Millions (Rs.618.900 Millions previous fiscal), the profit before tax of the Company was Rs.906.100 Millions as against the previous year's profit before tax of Rs.289.100 Millions. Net profit after tax stood at Rs.829.000 Millions, as against Rs.310.100 Millions in the previous fiscal, registering an increase of 167%. 

 During the year under review, the Company scaled new heights in revenue and profitability. The buoyancy in performance was triggered to a major extent by the successful entry of the Company into the US generics market. 

 Active Pharmaceutical Ingredients (API) Business:

 During the fiscal year under review, Orchid continued to maintain its strong position in the global cephalosporin markets. The Company has also been able to garner a major business opportunity in US for a lyophilized product based on its unique US FDA approved supply position. The net sale of all bulk actives during the year 2005-06 was Rs.4990.000 Millions compared to Rs.5590.000 Millions in 2004-05. Sale of oral bulk actives accounted for Rs.3380.000 Millions (Rs.4210.000 Millions previous fiscal) and sterile bulk actives brought in revenues of Rs.1610.000 Millions (Rs.1380.000 Millions previous fiscal year). The Company sold 713 MT of bulk actives and intermediates during the year under review compared to 824 MT previous fiscal. During the year, significant quantity of API has gone into development of formulations for the US business as a forward integration activity. 

 Formulations Business: 

 The turnover of the formulations business was Rs.3230.000 Millions during the fiscal, compared to Rs.790.000 Millions last fiscal. The higher performance trajectory of the formulations business has been propelled by their entry into the US generics markets with 5 products, of which Ceftriaxone injection and Cefprozil tablets and suspension have been the key introductions made upon expiry of respective patents. With more products getting approved by the US FDA and launched progressively, the Company anticipates continued growth. In each of the products, the Company enjoys a relatively exclusive position and limited competition as a result of the niche nature of the products requiring challenging technical development and stringent regulatory compliance. Simultaneously, efforts are being made to consolidate and expand the formulations business in less regulated markets. 

 The domestic formulations business, which decelerated over the last few quarters of fiscal 2004-05 due to trade resistance and VAT, started recouping. The Company has been working on diversified growth opportunities in four consolidated therapeutic areas to reinforce growth. The performance of the antibiotics division in specific has shown a notable improvement during the year 2005-06. 

Marketing Alliances: 

 During the year under review, the Company entered into an exclusive distribution alliance with Mayne Pharma, the injectable specialty pharmaceuticals Company of the Mayne Group Limited (Mayne) for marketing Orchid's select life-saving injectable antibiotic formulations in identified regulated markets. This alliance will cover the US, Canada, European and Australasian geographies. 

 Under this agreement, Orchid will develop and manufacture a range of injectable antibiotic formulations in specific dosage forms and strengths for distribution and marketing by Mayne. These products have a current market size of over USD 1 billion in the selected markets. 

 Orchid has thus six major exclusive marketing and distribution alliances with global generic majors Apotex, Par, Actavis, Stada, IVX and Mayne. These cover 21 antibiotic and 20 non-antibiotic products and represent a consolidated current annual retail market opportunity of over USD 33 billion. Orchid anticipates a step-function increase in revenues from these alliances targeted at the regulated markets resulting in enhanced margins and profitability going forward. 

Press Releases

Par Pharmaceutical Announces Strategic Alliance With Orchid Chemicals & Pharmaceuticals Limited.

SPRING VALLEY, N.Y., May 26 /PRNewswire/ -- Par Pharmaceutical, Inc., the principal subsidiary of Pharmaceutical Resources, Inc.

Today announced that it has entered into an agreement with Orchid Chemicals & Pharmaceuticals Limited., based in Chennai, India, to develop and market generic drugs. The companies will initially collaborate on the development of various dosage forms of as many as seven cephalosporin antibiotics. The companies will also seek to identify and develop up to 10 additional non-cephalosporin products.

"They are pleased to have the opportunity to collaborate with Orchid," said Scott Tarriff, president and chief executive officer. "This alliance will provide Par entry into a therapeutic category where they do not currently have a presence. Orchid represents an ideal partner to help us broaden their product line. They are a fully-integrated pharmaceutical company, with capabilities in areas ranging from active pharmaceutical ingredients to final dosage forms."

"This marketing alliance represents a landmark agreement for their company," said Raghavendra Rao, managing director of Orchid. "Par's marketing capabilities and regulatory expertise are a perfect complement to their strengths in product development and manufacturing."

Under the terms of the agreement, Orchid will be responsible for the development and manufacture of all products. Par will provide regulatory affairs support and submit each Abbreviated New Drug Application (ANDA) to the U.S. Food and Drug Administration (FDA) on behalf of Orchid. Par will have exclusive rights to market, sell and distribute the products in the U.S. and will receive a share of the net profits generated by all marketed products.

Orchid Chemicals & Pharmaceuticals Limited. is a leading pharmaceutical company headquartered in Chennai, India involved in the manufacture of cephalosporin and non-cephalosporin bulk actives, formulations and nutraceuticals. With exports spanning more than 75 countries, Orchid is the largest manufacturer-exporter of cephalosporin bulk actives in India and is ranked among the top five cephalosporin producers in the world. Orchid's world-class manufacturing facilities for bulk actives are located in Alathur and Aurangabad. Orchid's R&D facility located at Sholinganallur in Chennai is considered among the most advanced, state-of-the-art centers for applied research and analytical development. It also houses the company's New Drug Discovery infrastructure and a world-class pre-clinical toxicology and pharmacology center.

Pharmaceutical Resources, Inc., a holding company, develops, manufactures and markets generic pharmaceuticals through its wholly owned subsidiary, Par Pharmaceutical. The company is also developing a line of proprietary specialty pharmaceuticals and expects to market the first of these in 2005. Through its FineTech subsidiary, PRX develops and utilizes synthetic chemical processes to design and develop intermediate ingredients used in the production of finished products for the pharmaceutical industry. PRX currently manufactures and distributes more than 170 products representing various dosage strengths of 73 drugs. For press release and other company information, visit http://www.parpharm.com/

Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this news release contain information that is not historical, these statements are essentially forward-looking and are subject to risks and uncertainties, including the anticipated closing of the Kali acquisition, difficulty of predicting FDA filings and approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, uncertainty of patent litigation filed against us, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks and uncertainties detailed from time to time in the company's filings with the Securities and Exchange Commission, such as the company's Form 10-K, Form 10-Q, and Form 8-K reports.

AS PER WEB DETAILS

A decade of growth

Orchid Chemicals & Pharmaceuticals Limited. is an integrated pharmaceutical major (headquartered in Chennai, India) with diversified competencies in bulk drugs, formulations and drug discovery, with a strong orientation towards the advanced regulated markets. A snow-balling momentum in establishing new facilities both in bulk drugs and formulations for the regulated markets, securing approvals from international regulatory authorities and generating intellectual property has resulted in a strategic transformation in Orchid's business profile.

A first generation enterprise founded in 1992 by K Raghavendra Rao, Orchid has been recognised as the only company in the Indian Pharmaceutical industry to have recorded remarkable growth in a decade of operations.

Starting with a mature cephalosporin bulk drug, Cephalexin in 1994, Orchid quickly achieved a core competence and global standing in the technologically complex cephalosporin field. Orchid has since its inception grown ten-fold in physical output terms and fifteen-fold in value terms signifying an exciting growth journey.

Today, with exports spanning more than 75 countries, Orchid is the recognised as the largest manufacturer-exporter of cephalosporin bulk actives in India and is ranked amongst the Top 5-cephalosporin producers in the world.

Orchid's world-class manufacturing facilities for bulk actives, including the latest US FDA approved blocks, are located in Alathur, a little away from Chennai. Orchid also has dedicated manufacturing facilities for nutraceutical bulk active ingredients and cephalosporin and non-cephalosporin formulations in Alathur. A State-of-the-art US FDA compliant bulk actives manufacturing facility is also located at Aurangabad, near Mumbai.

Orchid's R&D facility located at Sholinganallur in Chennai is considered among the most advanced and state-of-the-art centre for applied research and analytical development. The centre works on several areas of research including process research, pharma research, new drug discovery, novel drug delivery systems and biotech research. Dedicated infrastructure and labs have been created for each of these research streams.

Orchid has also commissioned a pre-clinical toxicology and pharmacology centre, located in the R&D campus to aid pre-clinical trials.

Orchid's foray into the regulated markets is well supported by the commissioning of additional US FDA compliant manufacturing blocks for sterile and non-sterile APIs and a state-of-the-art mammoth US FDA complaint formulations manufacturing facility located at Irungattukottai, near Chennai for oral and sterile cephalosporin formulations.

Orchid's regulatory filings and approvals roadmap has seen little parallel in the industry. Orchid has over the last couple of years made significant progress in its regulatory journey. Several key bulk & formulation facilities have been inspected/approved by international regulatory agencies. Orchid has received two approvals from the US FDA for its API products (Cephalexin and sterile product, Cefazolin). In addition, several key API products have also been granted the Certificates of Suitability (CoS) from the European Directorate for the Quality of Medicines (EDQM). The cephalosporin API facilities and non-cephalosporin formulation facilities at Alathur have also been approved by the TGA, Australia. Orchid has also filed several US DMFs, EU DMFs and ANDAs to support and propel its entry and growth into the regulated markets of Europe and US.

Orchid is one of the few pharmaceutical companies of its size and scale to have received the ISO 9001:2000, ISO 14001 and OHSAS 18001 certifications for its world-class quality, environmental management systems and Operational Health & Safety systems respectively.

Orchid has undertaken several initiatives to position itself strategically in the evolving global pharmaceutical paradigm. From a core competence in manufacture of cephalosporin bulk drugs, Orchid has evolved into a composite end-to-end robust pharmaceutical corporation that has distinctly moved up the value chain.

Joint ventures

US JV - Bexel Pharmaceuticals Inc.

Orchid entered into a research joint venture with Bexel Biotechnology in the US called BEXEL Pharmaceuticals Inc. Orchid together with BEXEL's highly innovative team of scientists is undertaking new drug discovery and development in the US. BEXEL which has a strong expertise in drug discovery research, besides other activities has several lead molecules in the advanced stages of trials and is a perfect compliment to Orchid's existing R&D initiatives.

China JV - NCPC Orchid Pharmaceuticals Limited.

Considering the potential of the Chinese market, Orchid entered into a 50:50 manufacturing and marketing joint venture with the North China Pharmaceutical Corporation (NCPC), the largest pharmaceutical group in China. China is reckoned as one of the most competitive manufacturing bases in the world and is also a fast growing market for pharmaceuticals and the single largest market for Orchid's cephalosporin products. Given Orchid's strengths in technology and manufacturing and NCPC's wide market presence in China, the new JV entity (NCPC Orchid) will give Orchid a strong presence and a lead start in the Chinese market.

Europe JV - Biotechnological Chemical Development Limited.

Orchid established a 50:50 applied research joint venture (Biotechnological Chemical Development Limited.) with IBPP for peptide drugs and niche products in Europe. Significant progress has been made in this venture with a couple of high value peptide drugs to be unveiled soon.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.43.70
UK Pound	1	Rs.85.90
Euro	1	Rs.58.25

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		76

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions