Announcing the first profit in decades, MD P.M. Chandraiah said in the current year, Bengal Chemicals' operating profit can be ramped up to Rs10 crore
Kolkata: In a bid to stave off potential privatization, the management of India’s oldest pharmaceuticals company, Bengal Chemicals and Pharmaceuticals Ltd, on Wednesday said the state-owned enterprise can be turned around in five years.
Acting managing director and director (finance) P.M. Chandraiah on Wednesday said the 125-year-old company had turned in an operating profit of Rs4 crore in fiscal 2016-17 as against a loss of Rs9.13 crore in the previous year, thanks to better control over costs and improved employee efficiency.
Announcing the first profit in decades, Chandraiah said he was confident that in the current year, Bengal Chemicals’ operating profit can be ramped up to Rs10 crore, and in five years, the company will turn in profits of Rs30-40 crore a year if the government agreed to restructure its loans.
Operating results improved in fiscal 2016-17 despite a marginal decline in revenue from Rs112.76 crore to Rs111 crore. But in the current year, the management expects to expand its product range, which, in turn, will lead to the company’s revenue jumping sharply.
For decades, Bengal Chemicals has been producing low-margin generic drugs, but from May, it proposes to start manufacturing injectable drugs, which alone can generate Rs50 crore in annual revenue, according to Chandraiah. Going forward, the company plans to start producing oral drugs as it seeks to reclaim its lost glory, he added.
There is, however, no clarity immediately on the government’s plan to privatize the firm though it has been identified as one in which the government does not wish to remain invested in the long run.
The company has valuable real estate across cities, including in Mumbai, where its office is conservatively valued at Rs1,000 crore, according to Chandraiah. Yet, the company has through decades scaled back production for want of working capital.
Bengal Chemicals currently owes the government Rs215 crore in outstanding loans and unpaid interest. The management now wants the government to lower the interest rate on its outstanding loans from 21% to levels offered by commercial banks.
Alongside, the company is also looking to shore up sales of its over-the-counter products and home disinfectants. For want of a strong distribution channel, the company was forced to sell home disinfectants largely to institutional buyers at low realizations. Now with cash flows improving, it is looking to open up channels to sell these products, which currently account for 30% of its revenue, in the retail market, Chandraiah said.
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