Bengal Chemicals posts profit after 63 years

After 63 years, Bengal Chemicals and Pharmaceuticals (BCPL) has posted an annual profit, of ~4 crore, for financial year 2016-17 (FY17).

In 1977, the Union government took over management of the company, founded by chemist and entrepreneur P C Ray in 1901. It was nationalised in 1981.

In FY17, the company earned ~111 crore, about two per cent less than in 2015-16. But, it made a profit, compared to a loss of ~9 crore in FY16.

A senior company official said the company achieved a gross margin of ~23 crore in FY17. This improved its financial position by a little more than ~43 crore.

Finance director P M Chandraiah, who holds additional charge as managing director, said reduction in procurement costs and stoppage in financial leakages were instrumental.

Direct cost of gross sales reduced to 48 per cent in FY17, against 59 per cent the previous year.

After BCPL posted dismal revenue of ~17.1 crore in 2013-14, down 38 per cent from 2012-13, and a gross loss of ~36.55 crore, things started looking up the next year.

In 2014-15, revenue jumped 169 per cent to ~45.8 crore, and escalated to ~88.2 crore in 201516. The loss also narrowed from ~17.3 crore in 2014-15 to ~9.1 crore in 2015-16.

“However, it was important to emerge as a profitable venture and I knew that once a slew of measures are implemented, we can post a profit,” Chandraiah told Business Standard.

Joining the company in 2014, he tightened managerial grip. He also rationalised the cost structure. Procurement, accounts, sales collection, bill processing, inventory and payroll systems were centralised, leading to improvement in the reporting numbers.

“With a centralised system, we now have exact knowledge. This was previously missing,” he said.

Chandraiah also introduced financial and labour discipline. In the recent past, BCPL has opened more than 200 salary accounts to encourage workers to use electronic payment. It has also introduced a biometric attendance system, besides putting an annual appraisal process in place.

It also closed about 30 dormant bank accounts. About ~2 crore, previously kept in the firm’s current accounts, has been reduced to ~25,000, ensuring money isn’t kept idle. By 2020, BCPL expects to post a ~200-crore revenue and a profit of ~20 crore.