Bengal Chemicals' road to recovery

Once declared as a sick PSU, BCPL is on the road to recovery having posted gross profit after more than two decades

Tucked in a narrow lane off the eastern metropolitan bypass, an arterial road running through Kolkata, a pharmaceutical factory is abuzz with activity. The Maniktala factory of Bengal Chemicals & Pharmaceuticals Ltd (BCPL), which makes branded and unbranded generic drugs, is back in action. Readying to nearly double its turnover from Rs 53 crore to about Rs 100 crore this financial year and having set an ambitious target of Rs 500 crore of turnover in five years, BCPL is slowly but surely charting a road to recovery.

The 114-year-old pharmaceutical entity, the erstwhile Bengal Chemical and Pharmaceutical Works (BCPW), set up by academician Acharya P C Roy in 1901, was declared sick and referred to the Board for Industrial & Financial Reconstruction (BIFR) in 1993. In the early 1980s, the central government nationalised BCPW. But that did not address the company's woes --- high production costs, a ballooning employee base, and slipping market share. When BCPL was referred to the BIFR, following erosion of net worth, its losses were more than its income of about Rs 12 crore. The company was declared sick in 1993 and sanctioned a scheme for revival in 1995 by the BIFR. In 2004, the scheme was modified and a revival package of Rs 490.6 crore was approved by the BIFR and, in December 2006, by the Centre.

Since then, it has been a long journey. Things have turned around under the new managing director, E A Subramanian, a chemical engineer who had earlier worked with HLL Lifecare. The company not only improved its sales from Rs 16.87 crore in FY14 to Rs 53 crore in FY15, it also posted a gross profit after more than two decades (Rs 1.65 crore). Subramanian says BCPL aims to exceed Rs 100 crore in turnover in FY16. "We have already clocked Rs 35 crore of sales on Rs 40 crore worth of production in the first five months of this financial year," he says.

So, what led to the revival? The company has four plants --- two in Kolkata (Panihati and Maniktala) and one each in Kanpur and Mumbai. BCPL had undertaken a project for home products manufacturing at its Panihati plant, commissioned in 2013. It has already completed an ointment block at the Maniktala unit and is setting up a modern beta lactum block (in dosage forms of capsules, tablets, dry powder injectables and dry syrup), to be commissioned soon.

"This will strengthen our arm through production worth Rs 94 crore, including of ointments, beta lactum antibiotics and cephalosporin injections. Besides, we are also starting operations at our Kanpur factory, which will support our tablet manufacturing and bottling of hair oil. Therefore, production is likely to improve significantly," Subramanian said, adding the marketing team was strategising to expand its reach and penetration in existing markets. "The PPP (public-private partnership) policy of the Union government will help us gain business from government institutions. Considering all this, we are set to cross the Rs 100-crore mark this year," he says emphatically.

The Mumbai unit is dedicated to hair oil production. BCPL also owns a leading hair oil brand, Cantharidine, which clocked a turnover of Rs 6 crore in FY15.

To improve margins, the company is planning to expand its home products division. This division includes household disinfectants such as bleaching powder, apart from brands such as Pheneol, Klin Toilet and Lesol. Of these, Pheneol is a leading brand, posting a turnover of Rs 14 crore in FY15, says Subramanian.

An astute strategist, he outlines the road ahead for the company. "At this point, our strategy is to make available all our products across the country. Therefore, our objective is to emerge as the leader in the cleanliness and hygiene market.

We have an ambitious plan to make everything for cleanliness which will not be confined to home, floors or hospitals," he says.

As for brand revival, Cantharidine is a top runner. "Cantharidine hair oil is a vital candidate for revival, for which we are drawing a road map. People are talking about these brands in the past tense. We are going to bring these to the present and then, we'll have a tough job of ensuring reasonably good market share," Subramanian said, adding institutional buyers such as the Canteen Supply Division (CSD) of the armed forces would help BCPL record a reasonably good sales volume initially.

A key area in which the entity has fared well is employee management. In the 1990s, BCPL's employee count had touched 2,000. Post 1995 (when the revival scheme was sanctioned), it cut costs on various fronts. The staff strength was cut to about 1,000 by 1998-99.

Currently, BCPL has 392 employees, of whom 292 are aged 51-58 years. "We have been keeping the VRS (voluntary retirement scheme) plan open for willing employees. Once the existing lot retires, we will need to hire fresh manpower, in two to three years," Subramanian says.

Content, Subramanian acknowledges the support of all labour unions that helped the company return to the growth path.