The Rs 100 crore funding by the Centre to revive the ailing public sector pharmaceutical companies have started yielding results with four of them including Hindustan Organic Chemicals Ltd (HOCL) and Hindustan Insecticides Ltd (HIL) coming out of the red after a long gap.
Apart from the generous support by the Centre as cash infusion and waiving of loans/interests, the turn-around is also happening due to the purchase preference policy which paved way for buying of 102 drugs exclusively from the pharma PSUs by departments, PSUs and autonomous bodies of Central Government.
The HIL, after struggling with losses for long, finally recorded an all-time record turnover of Rs 193 crore during the last financial year. It made a profit of Rs 4.51 crore, with the company's sales growing at 37 per cent. Products worth Rs 20 crore were exported during the period.
"The net worth of the company also became positive at Rs 61.36 crore last year against the negative net worth of Rs 84.17 crore in the previous year. The company will now approach the BIFR to deregister the company out of SICA,'' a source in the Chemicals and Fertilisers Ministry said.
The Centre had written off the interest of Rs 126.69 crore and waived Rs 66.40 crore loan, besides converting the remaining Rs 31.55 crore into equity. The Government also provided guarantee to raise Rs 20 crore to revive the company.
Hindustan Antibiotics Limited, Bengal Chemicals and Pharmaceuticals Limited and Hindustan Organic Chemicals Limited are also on the process of recovery, if the latest assessment of their performance is any indication.
The preference purchase policy, which was put into effect from August, 2006, has reportedly done well to heal the ailing the PSUs. Besides the hospitals under the Government, the railways and army were also asked to purchase 102 drugs from the PSUs.
Government hospitals alone purchase nearly 500 varieties of drugs and spend around Rs 300 crore for drugs purchasing every year. Besides, the drugs of the national schemes and Railways and Army would bring in a huge revenue for the PSUs. If they buy 102 drugs as per the purchase preference policy, the PSUs would get Rs 250 crore every year.
In March, the government approved the package for Hindustan Antibiotics Ltd with a total sum of Rs 508.50 crore, including cash infusion of Rs 80.63 crore. Government has already released Rs 137.59 crore as cash investment and contribution through the sale of HAL land. Authorities said the Bengal Chemicals and Pharmaceuticals Limited would soon be directed to ensure adequate production and supply of anti-rabies vaccine in the market. Government offered to invest Rs 207 crore in it and was to waive loans and interest of Rs 233 crore as part of the package. Rs 117.19 crore was already released and a provision was made for budgetary support of Rs 90 crore during the 11th Five Year Plan.
HOCL is also expected to post a small profit once the results for the last financial year is finalized. Rs 250 crore was sanctioned as equity besides waving interests on loans. The Government also gave guarantee for Rs 100 crore loans from financial institutions, as part of the revival package.