A Bitter Pill ; Will Orchid's Raghavendra Rao Keep or Lose His Drug Company?
Summary
For Kailasam Raghavendra Rao, the promoter and Managing Director of Chennai based Orchid Chemicals & Pharmaceuticals, problems began as 2007-08 drew to an end. On March 17, a private equity investor in Orchid, Bear Stearns (which went bankrupt and was taken over by JPMorgan) suddenly offloaded all its Indian holdings including one million shares of Orchid Chemicals. The Orchid scrip, which was trading at Rs 200 levels then, started falling rapidly.
As the stock dropped below Rs 180, margin calls were triggered for Rao, who had pledged his own 7 million shares with stockbrokers Religare and Indiabulls to fund another 3.5 million shares that he was planning to acquire in the open market. Rao had borrowed Rs 80 crore for this purpose. He could not meet the margin calls, and, consequently, 5.6 million shares were offloaded in the market at around Rs 140 to meet the margin requirement. Rao's holding in Orchid fell to 17.06 per cent as on March 31, 2008, from 22.76 per cent in March 2007.See the full content of this document
Extract
A Bitter Pill ; Will Orchid's Raghavendra Rao Keep or Lose His Drug Company?
In the first week of April, even before Rao could recover from this shock, Solrex Pharmaceuticals, a Ranbaxy group company, started mopping up the depressed Orchid shares from the market and ended up ...
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