Solrex Pharmaceutical Co, which belongs to Ranbaxy Labs or its founders, has bought 9.54% stake in Chennai-based Orchid Chemicals & Pharmaceuticals.

A creeping acquisition has commenced in the shares of Orchid, which has become vulnerable to acquisition after its share price fell sharply during the last month.

Kailasam Raghavendra Rao, Orchid founder and managing director, stated that he was fixed to retain control over the company and would depend upon support from institutional investors. But his alternatives could be limited, since he possesses only 17%.

When contacted, Ranbaxy managing director and CEO Malvinder Singh said, “I have no comment to make.”

But previously, Mr. Singh announced that his company had been on the anticipating strategic stakes in the domestic market.

On March 17, Orchid shares fell harshly, when promoter holdings of around 7.5% were sold by stock dealers who had lent Mr. Rao and his family money to purchase those shares.

After that the buzz about Ranbaxy`s interest and a block deal of about one million shares, or 1.5% stake in the Orchid, caused rise in Orchid shares, which profited  
15.5% to close at Rs 207.15 on the BSE.

Solrex Pharma is a partnership firm floated by Ranbaxy Promoters. Solrex Pharmaceuticals purchased Orchid Chem Shares through open market from March 31-April 3. Solrex Pharmaceuticals has been buying from the level of Rs 161-175.
 
Orchid has posted a net profit of Rs 169 crore and Rs 866-crore revenues for the nine-month period ended December 2007. It has a return on capital of about 11% and a market capitalisation of Rs 1,400 crore.