For more than six decades, India’s oldest pharmaceutical company was languishing in Kolkata.

When the Indian pharmaceutical industry was growing into one of the world’s largest producers of generic drugs, the 125-year-old Bengal Chemicals & Pharmaceuticals (BCPL) was teetering on the edge. Government apathy and poor work culture, which have come to symbolise India’s public sector companies, had eroded its net worth.

But, not anymore.

For the first time in 64 years, BCPL, with assets worth over Rs1,500 crore, has turned profitable. In the 2017 financial year, it managed to rake in profits of Rs4.1 crore, as against a loss of Rs9.1 crore the year ago.

“We blocked financial leakages, brought in better human resource management, made biometric attendance mandatory, and installed CCTV cameras to enforce discipline,” PM Chandraiah, the company’s managing director, told Quartz. “We also successfully managed to handle workers’ union problems, and increased manufacturing, which has helped increase supply. From the next year, we want to start marketing our products well.”

BCPL now wants to increase its profits to Rs20 crore by 2020, nearly five times its current level.

The spirited turnaround comes at a time when the government, which owns 100% of the company (pdf), is looking to divest its stake completely.

BCPL currently sells a range of medicines to the government, particularly government hospitals, while its utility products such as phenyl, naphthalene, perfumes, and floor cleaners are sold to the government and in the open market.

Once a lab

BCPL was founded by Prafulla Chandra Ray, widely considered the father of Indian chemistry, in 1892 with a capital of Rs700.

After completing his doctoral degree from Edinburgh University in 1887, Ray worked as a professor at Presidency College, Kolkata, before he decided to start Bengal Chemical Works. It functioned as a laboratory initially, but Ray turned it into a company, Bengal Chemicals and Pharmaceutical Works Pvt Ltd, in 1901, with a capital of Rs200,000.

He was backed by eminent doctors in his venture. The idea was to produce domestic formulations that could take on British drugs. Among its most popular products were the hair oil Cantharidine, disinfectants like Lysol and Pheneol, and the famous naphthalene balls. The company produced anti-inflammatory ointments, anti-bacterials, and anti-snake venom serum, too.

Over the next four decades, it expanded rapidly, setting up two factories in West Bengal and one in Mumbai (then Bombay). But after Ray died in 1944, BCPL suffered from a lack of visionary leadership and troubles from its unions. By the early 1950s, even as the company sold nearly 35,000 products, including soaps and oils, and employed a workforce of over 2,000, it had begun making losses. It was all downhill from there.

In the early 1960s, BCPL slipped into bankruptcy. The government nationalised it in 1980 and, in 1993, sent it to the Board for Industrial and Financial Reconstruction (BIFR), which helps restructure sick firms. In 1995, the BIFR sanctioned a scheme to revive the sick unit and, in 2006, a modified revival package of Rs490 crore was announced for BCPL.

The recovery

But it wasn’t until financial year 2014 that BCPL focused on revival. Much of that credit goes to Chandriah, who joined the company after a stint with the government-owned Engineering Projects India Ltd. That year, the drugmaker recorded paltry sales of Rs17.07 crore, 38% less than the previous year.

“We had to take some stern decisions,” Chandriah said. “At the factory, people would only work from 10am to 5pm with a one-hour lunch break. That was ridiculous for any organisation. So we increased the working hours from 9.30am to 6pm with a half-an-hour lunch (break). That meant we began to manufacture more. We also spoke to some of our banks and restructured our interest rates.”

All these changes seemed to have worked. By 2015, BCPL’s sales had jumped 169% to Rs45.84 crore and, by fiscal 2016, to Rs88.19 crore. Losses narrowed down from Rs17.32 crore in 2015 to Rs9.13 crore in 2016. In fiscal 2017, the company had total income of Rs111 crore.

“Improper management and administration had plagued this company for far too long,” added Chandriah. “Even when it came to government contracts, BCPL wouldn’t respond to them or bid for them. We decided to be more proactive, and increased our marketing activities.”

To Rs200 crore

By the end of the 2017 calendar year, Chandriah reckons, the company will be able to sell some of its unused real estate, which will help it retire all its debt. The state-run company owes Rs200 crore to the central government and Rs13 crore to banks. “That would mean our net worth will be positive,” said Chandriah. “Then we can use our money to increase marketing activities and ramp up our products such as injectables and tablets.”

BCPL is also pinning its hopes on the Narendra Modi government’s decision to promote generic drugs in the country. In April this year, the government said it would make “legal arrangements” to ensure doctors prescribe generic medicines. Generic medicines often cost between 5% and 60% less than medicines sold by international pharmaceutical companies. India’s generic pharmaceutical industry is expected to grow into a $28 billion industry by 2020, from the current level of $13 billion.

“We will need to soon start branding our products well and, for that, we need to have good relations with doctors,” said Chandriah. Already, efforts are in place to bring more visibility to the brand. This year, the company tied up with e-commerce company Big Basket through which it plans to sell medicines online. BCPL is looking to generate at least Rs50 lakh through the tie-up in the current financial year, and at least Rs2 crore in the next one.

Alongside, the shutdown of two other government-owned pharmaceutical firms, Indian Drugs & Pharmaceuticals and Rajasthan Drugs & Pharmaceuticals, also means that BCPL is likely to receive more government orders.

“We have managed a significant turnaround of a company that has a rich history,” said Chandriah. “But it doesn’t end here. We have set some large targets for us, and we are certain about meeting them. We want to increase our total revenue to Rs200 crore by 2020. In the 2018 financial year, we are looking at Rs15 crore in profits.”

Make way. India’s oldest drugmaker has surely woken up from its 64-year slumber—and likely popped some steroids, too.