India’s first chemical and pharma company, Bengal Chemicals & Pharmaceuticals (BCPL), is on a turnaround path after the implementation of a number of initiatives such as cutting down raw material costs, boosting sales, introducing centralised payment system, increasing working hours for its employees and enforcing strong discipline on the shop floor, among others.

Following two years of intense efforts, the Kolkata-based public sector pharmaceutical company, founded by legendary chemist Acharya Prafulla Chandra Roy in 1901, posted a profit in the current fiscal after six decades. For the nine moths ended on December, 2016, its profit before tax and net sales stood at R2.04 crore and R58.87 crore, respectively.

The management has also chalked out an ambitious plan to clock a turnover of R200 crore and net profit of R20 crore for the firm by 2020.

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However, the lack of clarity over the Central government’s planned stake sale in Bengal Chemicals is impacting the company’s current operations and also threatening to impact its business growth prospects. The union cabinet in December last year said the government will explore the option of strategic sales for Hindustan Antibiotics (HAL) and BCPL, in which the Central government has 100% shareholding.

BCPL’s managing director PM Chandraiah lamented lack of clarity over the government policy on the company so far, especially in respect of percentage of equity to be sold and transfer of management thereafter. “I don’t know in this strategic sale how much they will going to offload. But function and fate of the company entirely depend on that,” Chandraiah told FE in an interview.

“We have not received any communication from the ministry (ministry of chemicals and fertilizers) on strategic sale. The government asked to give us details about all the asset and liabilities of the company, which we have already given,” he said, adding due to the uncertainty over its fate the company was facing difficulties in procuring raw materials and securing government orders for supplying medicines.

“Even government of India clients are asking questions that whether we would be able to supply medicines as per their orders post stake sale. There is also pressure from the clients from whom we procure raw materials. On the back of these pressures, our performance will be down,” he averred.

The company has three divisions—home care & personal care, pharma and industrial chemicals, with pharma contributing around 60% of its total sales.

BCPL, however, depends entirely on government sales for pharma segment as it is not possible now for the company to enter into any trade marketing tie-up for retail medicines sales.

“Government order is the sole channel for us for marketing pharmaceutical products because we produce generic medicines. In case of generic drugs, it is very difficult to push these in retail market without a proper marketing team,” Chandraiah explained.

The company said the Bureau of Pharma PSUs of India (BPPI) should take initiatives for mass marketing of low-cost generic drugs through its stores across the country. “Now we are getting government order for supplying medicine of around R60 crore per annum. If we get sufficient order this amount could go up to R400 crore,” the MD said.

The company is planning to tie up with online marketing companies this year for delivering its home care products at the doorsteps. Bengal Chemicals expects sale of five acres of surplus land at its Panihati facility may get completed by next fiscal as the government is in the process of appointing a land management agency. The firm expects to garner R50-60 crore from this land sale.

Total debt of the PSU pharma company currently stands at around R240 crore—government loan of R225 crore and bank loan of R15 crore—with R17 crore interest cost per year.