The Man behind Bengal Chemical’s turnaround
Bengal Chemicals & Pharmaceuticals, India’s first pharmaceutical company making loss for more than 60 years, reported a Net Profit in 2016-17, a feat that is highly laudable. (Read: The biggest turnaround –Bengal Chemicals & Pharmaceutical Ltd)
Transforming a loss making company into a profitable establishment is no mean feat.
This is achieved by P M Chandraiah, a remarkable person himself who started his career as a humble Typist-cum-Office boy with a leading organization’s showroom and now Managing Director of Bengal Chemicals with a global record of achievement.
Chandraiah, a qualified ICWA, joined Bengal Chemicals in 2014 as Director Finance and took additional charge as Managing Director in 2016.
Prior to this, he worked with NTPC as a Group IV employee after finishing his school, and completed B. Com and ICWA while working with NTPC and thereafter worked with IREDA, IRCON, NSPCL, EPIL and in various departments like, HR, Vigilance & Finance and at various locations.
He created a record among the PSUs by conducting four AGMs and complete eight Cost Audit Reports within a short period of 16 months and BCPL has been the first Company, among PSUs, to hold its Annual General Meeting of 2015-16 in July, 2016 itself and also the first Company to hold Annual General Meeting of 2016-17 on 19th June, 2017.
BCPL’s Home products like Cantharidine Hair Oil, Phenyl, Naphthalene balls which were once a household name, are being revived and as part of e-commerce marketing, the company has already tied-up with Bigbasket to sell the products.
LSW LifeScienceWorld in an exclusive interview with P M Chandraiah, finds out in detail the efforts he put in and his achievements.
LSW: Being India’s first pharmaceutical company, it lost its glory almost six decades back. You have created history with your leadership skill of reviving it by generating profit in this FY 2016-17. How was this achieved?
P M Chandraiah: We have taken a number of steps to make this a profitable Company in 2016-17 and this tremendous all round improvement has become possible due to the collective efforts of all Employees and Stakeholders.
When I joined BCPL in November 2014 as Director Finance, there were three annual Accounts and six Cost Audits pending for finalization and Company was not able to finalize its Accounts and submit the same to DPE/Ministry because of which the MOU and Corporate Governance were rated poor for a number of years.
I implemented Financial Discipline, by way of initiating salary accounts of the employees, which earlier were paid by cash, terminated inoperative and less-operative bank accounts, RTGS/NEFT payment, discontinuing cheque payments, streamlining suppliers’ payment, introduction of quarterly tendering system, Annual Appraisal for employees, etc.
We initiated centralized system of Procurement, Accounting, Sales Collection, Centralized Payment System, Centralized Bill Processing, Centralized Payroll and Stores.
To improvise Internal Financial Control Systems, we have stopped cash transactions, opened separate bank account for collection of rental incomes, implementing five tier audit system which are Banking Transaction Audit, Management Cross Audit of one unit’s accounts by other units’ officials, Internal audit by CA firm, Statutory audit by the Audit firm appointed by CAG and Govt. Audit by CAG Auditors.
With the above steps taken, BCPL has already become a Turnaround Company and reported a Net Profit of Rs.4.51 Cr. in 2016-17. Further, I am confident that the Company will sustain its profitability in the long run by following the Guidelines/Circulars issued by me.
LSW: BCPL’s three areas of business are Home products, Pharmaceuticals and Industrial Chemicals. Which of these three divisions has accounted for the growth and profit?
P M Chandraiah: All the three segments/areas of business have contributed to the profits of the organization. However, Home Product Division has contributed more to the profits because of which Company was able to report Net Profit in 2016-17.
We have improved our Pharma business a lot which has grown around 985% from 2013-14 to 2016-17 and our Industrial Chemical Sales has improved around 313% and that of Home Products Sales has increased around 264%.
LSW: Old timers recall, Bengal Chemicals struck a note famously for their household products, namely, Cantharidine Hair Oil, Aqua Ptychotis, Phenyl, Klin Toilet cleaners and naphthalene ball. Will there be a revival of these products on a larger scale?
P M Chandraiah: We are putting more efforts to increase the sales of these products and for achieving Rs.200 Cr. targeted sales from home product division; Pheneol itself will take to that magic figure of achieving Rs.200 cr. targeted sales within 10 years.
Similarly, we are working out a business plan to open retails outlets in Kolkata and we have entered in E-Commerce Market having tied up with Bigbasket for selling our products. We have further plan to enter into Super Markets/Shopping Malls.
For reviving the brand value of Cantharidine Hair Oil, Pheneol, Naphthalene Balls, etc., we have to penetrate our market to Pan-India basis and for this we should recruit Marketing Professionals in addition to incurring heavy expenditure on publicity, so that we can build up branding of these products.
In this connection, the Company had drawn a bank loan for Working Capital. With the improvement in the financial position of the Company and Net Cash Generation in 2016-17, BCPL repaid 50% of the Bank Loan in March, 2017 and planning to repay the balance amount 31st December, 2017 itself from the Cash General of the Company.
Further, we are planning to increase publicity expenditure out of the cash generations of the Company from 1st January, 2018 onwards so that branding of these products will be done and the sales will be increased from Home Products Division. That is why we are estimating Rs.60 Cr. sales from Home Products Division itself by 2020 which will be more than 200% increase from now.
Q4. The pharmaceutical products of BCPL are used in government hospitals. Is there any plan to enter the mainstream of the pharma industry?
BCPL used to supply the medicines only to the Government and its Departments. Before entering into the mainstream of the competitive pharmaceutical market, we have to increase manpower strength for which we require some working capital which will be generated out of its business operation in the forthcoming 2 to 3 years.
With our sole earnings, we will be able to spend on marketing activities and we do not want to depend on assistance from Government, which has already given a number of assistances to BCPL on various occasions in the previous 40 years, but the Company was not able to prove itself that it would generate profits and repay the assistances taken from the government.
Therefore, now, I am confident that BCPL can generate profits with which, it will expand its business in the near future by entering into the mainstream of Pharma Industry.
Q5. In one of the media reports, you had mentioned that if you were to get a longer reign, you would make BCPL a 300 Cr. company in five years time? Do you foresee that happening?
I am confident that BCPL will be a Rs.300 Cr. Company in the next five years. For that, we have already chalked out a “Vision and Strategy Document of BCPL” dated 13th June, 2016 wherein we have estimated that BCPL will become a profit making Company in 2016-17 which has already happened.
Further, we estimated that by 2019-20 Company will achieve a Turnover of Rs.200 Cr. and by 2025-26 it will become Rs.500 Cr. We are going as per our “Vision and Strategy Document” and I am confident that we will achieve Rs.300 cr. by 2022-23 with a Gross Margin of Rs.50 Cr. and achieve a Turnover of Rs.500 Cr. by 2025-26 with a Gross Margin of Rs.100 Cr.
Q6. Now that you are the turnaround man, with your future plans for the company and vision, do you think there might be a change of thought on the government’s plan for disinvestment?
For the Turnaround of this great Organization my Team and I myself have worked round the clock for the improvement in overall performance. I have working experience in various PSUs like NTPC, IREDA, IRCON, NSPCL, EPIL etc. and hence I am controlling all activities in this great organization.
I completely believe in the principles of Bhagwat Geeta. Whatever work has been given to me, I have performed them without expecting anything for my personal gain and I am working for the development of the organization and for the Society at large. I am leaving the end result on God, in our case on the government.
I strongly believe that if I deliver things by which BCPL achieves positive results, definitely Government of India will take a decision keeping in view the larger interest of this Great Nation and also this Great Organization.
Message to Stakeholders:
“Keep your company in the hands of Experienced, Dynamic, Honest and Goal Oriented Leader for its progress and sustainability”
Message to Employees:
“Work like soldiers of the Nation and work like an ordinary employee of the organization but take decisions like a Stakeholder/Officer/CEO of the Organization, so that your Organization will shine and stand at top level and contribute in the growth of the Nation”.