The Kerala State Drugs and Pharmaceuticals Ltd. (KSDP), the loss making PSU is planning to revive its formulation facility with a Rs.3 crore assistance from state government. The amount has been sanctioned by the state government in mid October and the same should be available now, according to officials.

Out of the Rs.3 crore assistance, allocated as KSDP revival package in 2006-07 Budget, Rs 1.5 crore would be spent to upgrade the manufacturing facilities to conform to Schedule M norms, according to R Rajagopal, Managing Director, KSDP.

"We have a plan to manufacture 120 products as per our plan which is expected to completed by March 2007. The company is all set to commence the revival plan with initially introducing 30 products shortly," Rajagopal told Pharmabiz.

The company with an accumulated loss of over Rs 60 crore, envisages a turnaround as the government has shown interest to carry out a one-time settlement with State Bank of Travancore for its outstanding loan amounting to Rs 2.25 crore and to covert the same into equity.

The company has also signed a MoU with the four ministries of industries, finance, health and Cooperation and Devaswom departments and trade unions to settle various issues. As per the MOU, the health department has to buy the medicines from the company and should provide 65 per cent of the total cost as advance towards working capital. The department should also direct the hospital development committees to buy as much drugs as possible from KSDP, as a promotional measure.

The labour unions, according to Rajagopal, had also agreed to assist the management in its revival, modernisation and progress by following a suitable work culture and cooperation as per the MoU. The company at present holds total staff strength of around 210 employees. He added that the company would also focus on corporate and institutional marketing using the credibility as a PSU for a rapid growth in a short term.

"The fund we have allocated in this budget is to upgrade the facilities and achieve its growth potential. The government is aware that this amount is not adequate for the complete revival of KSDP and we have not decided what else to be done in this regard for additional funding," told Dr Thomas Issaq, Finance Minister, Kerala to Pharmabiz.

It should be noted that Dr Thomas Issac was earlier demanding for any assistance near to Rs 16 crore for the revival of KSDP. In 2005, Thomas Issac, who was a member of cabinet sub-committee, which studied the turnaround options also alleged that the government has tailored the assistance to Rs 5.5 crore while the situation calls for a significant amount.

While answering to a query on his earlier allegation, the minister said that the current allocation in addition with the support of health department would result in a total assistance of Rs 5.5 crore, which has been under consideration of the last government in principle.

As Pharmabiz reported earlier, the beleaguered KSDP has submitted a request for Rs 17 crore for revival, apart from the support from health department for purchase preference and advance purchase payment. The company, which was the only public sector manufacturer of Vitamin A in the country, has closed down its vitamin A plant some time ago.