Orchid Chemicals has announced its first quarter results. It has posted consolidated net profit of Rs 48.59 crore (Rs 485.9 million) in the first quarter versus Rs 10.83 crore (Rs 108.3 million) in corresponding quarter of previous year.

Consolidated net sales stood at Rs 251.8 crore (Rs 2.51 billion) versus Rs 212.7 crore (Rs 2.12 billion) and other income at Rs 51 crore (Rs 510 million).

K Raghavendra Rao, MD, Orchid Chemicals, said that 50% of profits are from their new product launches.

He added that they will maintain interest cost at Rs 16 crore in the next quarter.

According to him, FY08 topline is seen to be growing at 25-30% and the bottomline to be up 30%.

Excerpts of CNBC-TV18’s exclusive interview with K Raghavendra Rao:

Q1: What explains this nearly Rs 40 crore growth in net profit? How much of it came by way of Forex gains and how much of it is because of higher realisations?

A: Higher realisations contributed to about half of the profit. About Rs 25 crore out of the Rs 51 crore on a standalone basis, is due to product introductions, product mix and higher sales in the US market, especially the new launch that we have done; Cefepime, we are the only generic producer of this product in the American market.

The other half, roughly about Rs 24 crore, has come from the exchange related one, which has got exchange on both, unconvertible bonds as well as on debtors. Under foreign currency, outgo and ingo put together is about Rs 25 crore.

So roughly half is attributable to operations and half is attributable to the exchange situation.

Q2: Give us an idea of Cefepime, what kind of growth do you expect in sales from there and the margins from this particular product?

A: It will be pretty significant because it’s a USD 200 million product of Bristol-Myers Squibb. We happen to be the only generic. The product patent, date patent expired in March and we launched this product at the end of June. We expect no competition for the next 6 to 8 months or so.

I expect a robust performance from this product. It will be difficult to pinpoint a number, but I think, being the only generic in a USD 200 million product, it should contribute significantly to our topline and bottomline this year.

Q: In terms of interest costs, have you paid off the debt of USD 138 million? What would be the saving in terms of interest costs?

A: Yes it will be 9% on USD 138 million. The saving will be roughly about Rs 50 to 55 crore compared to the earlier year and that has already started reflecting. For the current quarter of the current year, the interest charge is only Rs 16.4 crore.

If you see the trailing quarter, it was Rs 24 crore or so and the corresponding quarter was Rs 22 crore. So that has already started reflecting in the books and we don’t expect this number to go beyond Rs 16 to 17 crore per quarter going forward.

Q: How do you expect the end the year in terms of profits since there are so many other non-operational items like interest gain as well as Forex gains?

A: I think in a way, operations are also contributing significantly. We are on the verge of launching a few more products in the next few months, especially in the US market followed by the EU market, where we have all the approvals.

So I think in the current year, we should see a robust growth of at least 25 to 30% in the topline for the year as a whole and much more than proportionate then that at about 50% or more profit for the year as a whole.

Q: Can you give us a bit of a breakup of your revenue between Cephalosporins and non- Cephalosporins? Also a bit of your geographic breakup between regulated and non-regulated markets?

A: A third of the revenues have come from the US market alone. About 45% of total revenue is from the regulated markets, including EU and other regulated markets. The remaining 55% is from the less regulated markets, so to say.

Between bulk to formulations, the breakup is roughly half. 50% of the sales are in bulk and 50% of the sales are in formulations.