Executive director KP Mundhra said that unhealthy competition in the IV fluids market has left the company with a poor profitability. "India's IV fluid market size is 30 crore bottles a year and the existing capacity is 75 crore bottles. All the players have the same technology. It resulted in a cut-throat competition and hence, our profitability suffered miserably in the past two years," Mundhra said.

In 1996, Albert David invested Rs 16 crore to increase the capacity of its IV fluid manufacturing unit at Ghaziabad by two crore bottles a year. At present, it can make 3.2 crore plastic bottles and one crore glass bottles of IV fluid in a year. The unit is running at 80 per cent capacity utilisation.

The capital investment and poor market conditions led to high interest and depreciation costs and lower profitability. As a result, Albert David suffered a net loss of Rs 1.74 crore in 1997-98, on a turnover of Rs 73.56 crore. In 1996-97, turnover and net loss were Rs 61.78 crore and Rs 2.16 crore, respectively.

The share of formulations, now accounting for 55 per cent of Albert David's business, is likely to go up to 70 per cent following the realignment. The share of IV fluids will go down from 45 per cent to 20 per cent. Disposal syringes and needles will continue with a share of 7 per cent to 8 per cent. A focus on formulations will help the company come out of the red, Mundhra said.

"We have registered a good performance in the first quarter compared to that of the last year. We hope that by introducing the new items in the formulations market, we will be able to wipe out the losses. We have also diversified our Ghaziabad unit for producing formulations," he said.

The 60-year-old company reported a net profit of Rs 43.87 lakh on net sale of Rs 20.79 crore in the first quarter of 1998-99. In the corresponding period of the last year, it had a net loss of Rs 1.59 crore on a turnover of Rs 16.84 crore.

Albert David plans to introduce a host of therapeutic drugs like anti-spasmodic, anti-ulcerant, antibiotics and anti-inflammatory. It is also planning some nutritional and herbal products. Moreover, Mundhra said, market conditions of IV fluids have also changed for the better. Members of the Pharmaceutical Form-Fill-Seals Association of India, the association of the makers of plastic filled IV fluids, have discussed ways to change the market scenario.

"At several meetings we discussed that the market cannot continue in the present fashion, with everyone offering discounts and concessions. Every member has suffered and they have realised that the cause is over capacity and unhealthy competition. At present, we have been able to check some of the unhealthy practices, like discounts and concessions," the executive director said. The company is also trying to boost its exports from Rs 2.37 crore in 1997-98 to Rs 5 crore this fiscal. "We will concentrate in countries like Vietnam, Kenya, Tanzania, Uganda, Zaire and Russia," Mundhra said.

Earlier in the day, at the company's 59th annual general meeting, chairman AK Kothari said the better performance in the first quarter is due to higher sales of formulations and reduced losses from IV fluids.

The Kotharis, who took over the company from the British owners in 1965, have interests in plantation business but Albert David continues to be their flagship.