The country’s oldest pharmaceutical company, Kolkata based Bengal Chemicals and Pharma Limited (BCPL) is on the path of regaining its past glory, thanks to the efforts taken by P M Chandraiah, MD (Additional Charge) & Director (Finance), BCPL. Express Pharma spoke to him to know more about his plans to rejig the fortunes of this century old PSU
BCPL was formed by the great scientist Acharya PC Roy in 1901 and the company is running into losses for the past few decades. Explain why this company is in losses for a long time?
BCPL is a great company and it is the first pharma company in India established by great scientist Acharya P C Roy. Till early 1950s, it was running in profits but after the demise of Acharya PC Roy in 1944, from late 1950s, it started running into losses. Due to its prolonged years of losses and labour unrest, BCPL was nationalised in 1981. Now, the company is owned by Central Government. It was referred to the Board for Industrial and Financial Reconstruction (BIFR) in 1992 and was declared sick. But recently, the working culture has improved a lot. The reasons for losses were due to improper planning, labour unrest and also lack of team work.
What is the current status and future prospects of the company?
The company reported a net profit of Rs 1.16 crores in the first half, which ended on September 30, 2016 and is confident of reporting profits from 2016-17 onwards and it will be the turnaround year for the company. Further, during the last two years, the performance has improved a lot and in 2015-16 the company reported loss of Rs 9 crore against a loss of Rs.17 Crore in 2014-15 and a loss of Rs 37 crore in 2013-14. Recently, Bengal Chemicals was awarded “Excellent” rating in Corporate Governance from Department of Public Enterprises, Government of India for the financial year 2015-16.
What are the steps taken to turnaround this Company and to achieve Net Profit during 2016-17?
We have taken a number of steps to make it a profitable in 2016-17 and we will take further steps to sustain the profitability in the long run. For example, we were able to negotiate for reduced interest rates on our loans from our bankers, able to procure raw and packing materials at lesser rates, able to reduce the administrative expenses, etc. and requested Government of India to reduce interest rates on government loans to match with the rates of commercial banks. Recently, we have developed financial discipline as well as operational discipline with which we will be able to sustain its profitability in the long run.
When did you join BCPL and what are the steps you have taken to change this company?
I have joined BCPL as Director (Finance) in November, 2014 and taken additional charge of MD from June, 2016. On the date of my joining, there were three annual accounts and six cost audits pending for finalisation and company was not able to finalise its accounts and submit the same to DPE/ Ministry because of which company’s MOU rating and Corporate Governance rating were rated poor for a number of years. After my joining, we have been able to conduct four AGMs and complete eight Cost Audit Reports within a short period of 16 months and BCPL has been the first Company, out of all the PSUs, to hold its Annual General Meeting of 2015-16 in July, 2016 itself. Due to the recent efforts, BCPL was able to get Excellent Corporate Governance Rating in 2015-16 from DPE. I had issued more than 60 Circulars/ Guidelines for improvement of systems. I have developed financial discipline through various ways such as:
- Opening more than 200 salary accounts of the employees (earlier salary was paid through cash)
- Closing of more than 30 inoperative/ less-operative bank accounts,
- Starting of rtgs/ neft payment
- Discontinuing cheque payments
- Installing cc tvs in the offices and factory premises,
- Monitoring advance payments to employees,
- Streamlining the suppliers payment system,
- Introduction of quarterly tendering system,
- Introduction of annual appraisal system for its employees
Further, as a part of improvement of the internal financial control systems in the company, we have stopped the entire cash transactions, opened separate bank account for collection of rental incomes, implementing five tier audit system i.e. (i) Banking transaction audit (ii) Management cross audit of one unit’s accounts by other units’ officials (iii) Internal audit by the Chartered Accountants’ firm (iv) Statutory audit by the Audit firm appointed by CAG and (v) Government audit i.e. by CAG Auditors.
With the above steps taken, I am confident that we will become a profit making entity in 2016-17 itself and we have already reported net profit in the first half ended on September 30, 2016. We will sustain profitability in the long run with the help of guidelines/ circulars issued by me in the recent past, recent cost cutting measures taken as explained above and also due to the improvement in the Internal Financial Control Systems in the Company.
What are the major products on which the company will focus in future to improve its turnover and profitability?
The company has recently commissioned its plants to manufacture various types of medicines. We will definitely focus more on the pharma division which is contributing more than 60 per cent of its turnover. Further, Pheneol brand itself is able to take this company to greater heights. So, we will also concentrate more on home products like Pheneol, White Tiger, Naphthalene Balls, etc. for further growth. We have plans to achieve a turnover of Rs 200 crore by 2020 and also a matching respectable Net Profit on the said Turnover.
What is the message you want to give the loss making companies and also to their stakeholders?
The stakeholder of the loss making companies should vigilantly watch the activities and should analyse the reasons for their losses and take all necessary steps, without fear of losing popularity and favour to locality. They should also ensure that the company is in the right hands of a Chief Executive who will take up initiatives , treating the Company as his own , since he is one of the stakeholders and also a responsible citizen of the nation; then any sick company, whate