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PSUS:
TEMPLES OF DOOM
Swadeshi
Soap-bubble
The
PSU drug manufacturer has sold land to shore up its sagging bottom line.
BENGAL CHEMICALS & PHARMA LTD
Nationalised: 1980; HQ: Calcutta; Product: Drugs, hair oil, soap, disinfectants;
Public investment: Rs 87.4 cr; No. of workers: 1,071
By
Sumit Mitra
The
Bengal Chemicals & Pharmaceuticals Limited (BCPL) factory at Maniktala
in Calcutta is heavy with the aroma of unsold and semi-finished soaps
and perfumes. It is also teeming with nostalgia. The portrait of nationalist
leader Acharya P.C. Roy, who founded the company in 1892, hangs at almost
every corner of BCPL. Managing Director Probir Roy (no relation of the
19th century champion of swadeshi) never tires of reiterating that "Bengal
Chemicals was born as a social movement, not as a business".
That's a
pity, for as per the acharya's well-known motto-"Indians can make
anything that the British can"-there was little room for cost-control
and marketing. Post-Independence, these deficiencies drove the company
to the threshold of bankruptcy, with most of its 3,500-odd lines of drugs,
soap, oil and chemicals squeezed out of shelves by domestic competition.
Finally the Union government incorporated it as a PSU in 1980. But it
hardly solved the company's problems. Its marketshare was slipping, production
costs were prohibitive and the number of employees had ballooned to around
2,000 at the company's two factories at Maniktala and Panihati, and one
each in Kanpur and Mumbai. In 1992, when BCPL was referred to the BIFR
following the total erosion of its net worth, it posted a net loss of
Rs 13 crore which exceeded even its income of Rs 12 crore.
From 1995,
BCPL went ahead full steam implementing a BIFR-approved revival plan that
focused on reducing fixed cost, stopping the production of unviable items
and reducing non-commercial expenditure. The manpower was thus reduced
to 1,071 by 1998-99, the number of products brought down to a little over
100, and many inessential costs were curbed. To calm down the labour unions,
the company created a working group for decision-making with representatives
of the management, officers and workers. Yet, BCPL has neither been able
to regain its position as a brand leader in hair oil and soap, nor succeeded
in rewriting its bottom line in black ink.
Significantly,
the gradual reduction in losses has been possible due to the annual injection
of Plan and non-Plan funds from the Union government-which was Rs 6 crore
in 1997-98 and Rs 4.5 crore in 1998-99. In 1996-97, in addition to these
inflows from Delhi, the company sold some land at a profit of Rs 15.60
crore to show an impressive single-year bottom line. But while pharmaceutical
products owed a new lease of life thanks to a price preference in government
orders, consumer items never regained popularity. In 1998-99, against
an installed capacity of 150 tonnes of soap, BCPL produced only 40 kg.
Even for drugs, more than half the capacity lies unused.
BCPL has
escaped being a candidate for disinvestment due to its "core industry"
status as a drug manufacturer. The latter is a questionable claim, for
BCPL hardly has the volume to influence the prices of prescription drugs.
As regards its heritage, it was perhaps better honoured in history books
or a museum of brands, not by blocking 100 acres of prime land to manufacture
some perfumes and hair oils that were grandmother's favourites.
Malarial
Malady
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The
Indian industry has increased its decibel level of whining. Instead, it
should get the government to deliver, says INDIA TODAY Associate Editor
V. Shankar Aiyar in 
