IDPL eyes export, to re-enter domestic pharma retail

Government plans to revive the sick company

Indian Drugs and Pharmaceuticals Ltd (IDPL), the central government-owned entity, is trying to do something it has not done in 54 years of existence. The sick drug maker is exploring opportunities to make a token export this financial year. It also plans to re-enter the domestic retail market, after over a decade.

The government recently invested Rs 3 crore in IDPL's Gurgaon unit to modernise a section of the plant. An expenditure of another Rs 2.5 crore is being planned to make the processes compliant with World Health Organisation (WHO) quality standards.

A target to export a small quantity of medicines has been set under a deal signed between IDPL and the government for the current year. At present, all the drugs manufactured by IDPL are consumed in various government-run programmes.

"We inaugurated the modernised unit at IDPL Gurgaon early this month. Currently, it can sell only in India. To export, they need to comply with WHO standards. We need to invest to replace some of the older machinery and then it will qualify," V K Subburaj, secretary in the department of pharmaceuticals, told Business Standard. India is a major exporter of pharmaceutical products and ships drugs worth Rs 90,000 crore a year.

IDPL clocked revenues of Rs 72 crore in 2014-15. "We say the company is functioning well only when revenue touches Rs 700 crore. It will soon come to at least Rs 400-500 crore. There is no plan to privatise it," he said.

IDPL is recruiting executives, mostly on contractual basis, to ramp up sales. It is also trying to appoint new distributors.

The government is investing another Rs 15 crore in IDPL's Hyderabad plant, expected to become operational later this financial year. IDPL sits on a huge land bank of 1,800 acres (most of these at Hyderabad and Rishikesh) and some of this could be leased to raise money for investment in revival. IDPL had about 10,000 employees about a decade ago. To cut losses and reduce financial burden, most of the employees were offered a voluntary retirement scheme.

In the process, IDPL borrowed money and failed to repay it, leading to a total burden of Rs 1,000 crore. "We are trying to rehabilitate IDPL and are working on a package. We are working out a strategy to wipe out the past liabilities. It will go to the Cabinet. Some of the individual units are making profits," said Subburaj.