Govt moves Calcutta HC over sale of Bengal Chemicals1 min read . Updated: 06 Apr 2018, 03:05 PM IST
A single-judge Calcutta HC bench had struck down Bengal Chemicals sale saying that the pharma firm shouldn't have been classified as a low priority public enterprise
Kolkata: The centre has moved the division bench of the Calcutta high court, challenging a verdict delivered by a single-judge bench that struck down the strategic sale of Bengal Chemicals and Pharmaceuticals Ltd, even as the company continued to improve its operating performance.
On Thursday, Bengal Chemicals, one of India’s oldest pharmaceutical companies, said it had registered a pre-tax profit of Rs8.91 crore in the year till 31 March, up 97.5% over Rs4.51 crore in the previous financial year, thanks to cost rationalization.
High court judge Debangsu Basak had ruled in February that Bengal Chemicals should not have been classified as a low priority public enterprise. He also struck down plans to sell surplus land at a Bengal Chemicals factory for which bids were invited.
The company also filed an appeal against the verdict last month, but it has not yet been heard because of the ongoing lawyers’ strike.
Founded in 1901, Bengal Chemicals was taken over by the centre 20 years ago in a bid to rescue the enterprise from running aground. Based on recommendations of the NITI Aayog, the government decided to sell surplus land and then transfer ownership of the company. Meanwhile, for the financial year 2017-18, the company reported revenue of Rs80.07 crore, compared with Rs85.36 crore in the previous year. The decline in sales was due to implementation of the goods and services tax, said P.M. Chandraiah, managing director. Business was disrupted for at least two months.
In the current year, the company’s revenue is expected to jump 25%, while pre-tax profit is seen going up to Rs15-20 crore, according to Chandraiah. Bengal Chemicals has already repaid Rs6 crore of interest-bearing loan taken from the government. It will repay the government the remaining Rs16 crore of interest-bearing loan by December, he added. The company has in November last year repaid a bank loan of Rs28 crore.
The company owes the government Rs107 crore, and an accumulated interest of Rs74 crore. Bengal Chemicals has appealed to the government to reconsider the interest charged on the loan. Currently, the government is charging an interest rate of 21%.
The company has 25 acres of surplus land at its Panihati factory on the outskirts of Kolkata, which is conservatively valued at Rs350-400 crore. Selling it will help the company square off its accumulated loss of Rs248 crore, said Chandraiah.