As the century old first Indian pharmaceutical company Bengal Chemicals and Pharmaceuticals Ltd (BCPL), had successfully come out of nearly seven decades of loss, its Managing Director and Director Finance Pilla Marri Chandraiah spoke to Kingshuk Banerjee about how he brought the radical change in the mind and work of the employees of this central government undertaking, to set the company on the right course, aiming at a turnover of Rs. 500 crore in the next five years to achieve Mini Ratna status.
Q. What was the scenario when you took over as Director Finance?
A. Even after nationalisation and release of a number of financial packages on various occasions, the company’s performance was not improved and was reporting losses regularly since 1977 and was referred to BIFR in 1992. The annual Accounts and the cost audit reports of the company were not finalised in time and there were four years of annual accounts and 6 Years of cost audit reports pending. Moreover, due to non-finalisation of annual accounts, cost audit reports and non-filing of annual returns, the Ministry of Company Affairs had earlier put the company and its Directors on the lists of “Defaulting Company” and “Defaulting Directors” respectively for the last 15 years.
Q. How did you clear this mess?
A. After ceaselessly working for six months with my finance team, all the backlog accounts are cleared. In fact such was the pressure of work that I used to take my eight member finance team to my official residence where they would rest for a few hours and would get refreshed and come back to office. After clearing the all pending audits and annual accounts the company as well as its directors could also get relieved from the defaulters’ list by October 2015.
Q. How did you put the finance of the company on the right course?
A. On the financial front I took special efforts to streamline the situation and it started with stoppage of cash transactions by opening more than 220 Salary Accounts amid much resistance. Then followed closure of around 50 unnecessary bank accounts. Even advances taken as far as twenty years back were not adjusted. 80 such cases were taken into accounts and dues recovered.
Q. You also mitigated the problem of excessive direct cost.
A. Analysing the balance sheet I noticed that the procurement cost much above the industry norm and the root cause of this lied in the practice of yearly tender. So a quarterly tender pro-cess was introduced and pre-bid meeting held. In 2013-14, direct cost involving raw materials and packing materials was an astronomical 85% whereas it should be around 50 to 55%. Gradually things started changing with direct cost plunging to 54% in 2016-17 and 53% in 2017-18. Owing to the volatile global situation, the direct cost may increase in 2018-19 to 58% to 60%. In other words, in 2013-14 Rs. 60-62 was spent for raw materials and Rs. 20-22 was the packaging cost out of Rs.100 as cost of production. Now raw materials costs plunged to Rs. 35 to 40 while packaging cost dipped to Rs. 10 to Rs.15, out of Rs. 100 production cost.
Q. How did you boost the sagging work culture?
A. In order to motivate the employees, birthday & retirement Day Celebrations were started to organise as well as issuing appreciation letters for the extraordinary works done by them. The practice of paying full dues to the retiring employees on their last day in office was also initiated. The Annual Appraisal System of Employees was brought into the system in order to have transparency. Installation of CCTVs in the Corporate Office, Factories and Depots also followed. In order to streamline attendance, a Biometric Attendance System was introduced. Simultaneously the gate control system was introduced in the factories & offices.
Q. How is the initiative of resuming production of Anti Snake Venom Serum going on?
A. BCPL is the first Asian company to come out with Anti Snake Venom Serum (ASVS) and we used to export it to all neighbouring countries along with Dubai. But it was stopped some 10 years back. Now again initiatives have been taken to revive the production and I have written to the Ministry asking for permission. Not only an under construction building for that is there at our Manicktola plant but some 50,000 to 1,00,000 people are dying owing to snake bites each year in India. If one includes neighbouring countries, the figure would be double. For each snake bite 10 to 15 injections need to given and the price of one injection would be around Rs. 700. Right now two firms, one each in Hyderabad and in Pune produce ASVS but still shortage is there. In my own village dwelling I myself caught snakes so many times. But the incident is decreasing nowadays. Nevertheless for public welfare and health, BCPL could resume the production. In my estimate Rs. 30 crore investment could be returned with 3 to 4 years and Rs. 35 to 40 crore annual turnover could be done with this ASVS segment and export could be done to African countries, Nepal and Sri Lanka. With my own annual internal generation of Rs. 25 crore, we could easily finish the construction of the building and have necessary equipment. Therefore once the green signal is received, the process could be started. When I was in class 10, my father died of snake bite. So I know the kind of trauma and fear psychosis which descend upon persons close to the victim. My father died without any ASVS because we did not have knowledge of it. So if I get a chance to resume ASVS production, I would be the happiest person. If I could save one person, I would consider it as good as saving my father.
Q. So how do you perceive Bengal Chemicals 5 years down the line?
A. When I was given the charge of Managing Director of BCPL on June 1, 2016, my priority was to make it a profit making company from the very first day and keeping that in mind I initiated purchase, billings, accounts, collection, payments including wages and salaries-all in centralised manner. After initial resistance, the workers have understood the gravity of the situation and have started working like soldiers. Moreover at present the net worth of BCPL is negative to the tune of Rs. 92 crore. I expect BCPL to be a positive net worth company by 2022 and employees’ pay revision could be done. So with positive net worth as well as profit making, Mini Ratna status could be achieved too.