The Hindu Business Line : KSDP may be revived with Govt support

The revival plan would be able to effect a complete turnaround of KSDP in two years and help it operate with regular profits and enriched cash flow.

Kochi , July 3

The revival of the state-owned Kerala State Drugs and Pharmaceuticals (KSDP) at Alapuzha might become a reality now as the latest rehabilitation package, on behalf of the company employees was initiated by the Finance Minister, Dr T.M. Thomas Isaac.

The previous government had turned down a revival proposal prepared by the company management, which involved Government support to the tune of Rs 17.4 crore, trade union sources told Business Line. According to the proposal, the unit could restart operations with a one-time minimal Government support to the extent of Rs 12 crore and loan and advance, which included Rs 5 crore to finance defaults to banks, creditors, the Kerala State Electricity Board, statutory dues and part of unpaid wages to workmen. While Rs 4 crore may be obtained from the State Health Department as an advance towards supply of drugs, Rs 3 crore could be granted as a loan for essential investments for installing good manufacturing practices, which is vital for the unit's growth and survival. .

It is expected that the unit will get regular supply orders from the health department for a minimum offtake of 70 per cent of the annual production at rates applicable under competitive bidding. The sources said that the proposal, if implemented, would be able to effect a complete turnaround of KSDP in two years and help it operate with regular profits and enriched cash flow. By 2009-10, it would have sufficient financial strength to consider further expansion of existing activities or venture into projects intended for its diversification. KSDP was incorporated with a paid-up capital of Rs 4.2 crore under the Company's Act in December 1971 and started commercial production in September 1974 with a unit to formulate several commonly used drug preparations. In 1983, a unit to manufacture 30 million units of Vitamin-A was also installed. The unit went into loss since 1984 on account of poor capacity utilisation, low sales, low productivity, high overheads and heavy interest burden.

Subsequently, orders at hand could not be serviced for want of sufficient working capital. Current loan liability stands at Rs 49 crore with net worth at Rs 56.07 crore during 2003-04.

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