The Hindu Business Line : Govt begins Kerala State Drugs' revival process

Action plan
Industries Dept to reconstitute the board by inducting experts in this discipline.
Company's management to be granted autonomy.
Finance Dept to make available Rs 3 crore immediately.
Health Dept to buy all the drugs manufactured by KSDP.

Kochi , Aug. 2

The State Government has taken up the revival package of the sick Kerala State Drugs and Pharmaceuticals Ltd (KSDP) in Alappuzha district, as part of its programme to retain and modernise ailing PSUs, by signing an MoU with the departments concerned, company management and trade unions.

The parties concerned have inked the MoU with the objective of completely restructuring the company and putting it back on a consistent growth path, the State Finance Minister, Mr T.M. Thomas Issac, told Business Line. "It is a guideline towards achieving this objective," he said.

He said that the present Government had raised the allocation for the public sector to Rs 55 crore in the 2006-07 Budget as against Rs 5 crore allocated previously. It was announced in the Budget that by ensuring the co-operation of all concerned and investing directly Rs 3 crore from the State treasury and by advancing the cost of medicines to be bought by the State Health Department, the company could be operated profitably from the first year itself, he said.

Given the present financial condition of the company with a total liability of Rs 12.54 crore, the revival of KSDP is not an easy affair, he pointed out.

He said that Rs 3 crore has been allocated in the current fiscal for maintenance, introducing good manufacturing practices and clearing urgent liabilities. Besides, to comply with the orders of the Health Department Rs 2.5 crore has also been provided.

The target is that using the financial assistance and capitalising on the favourable atmosphere the company could make operational profits in the current fiscal itself, he said.

Through a one-time settlement, the liabilities with the banks could be settled this year. By generating orders from health departments of other States the production of the company could be enhanced, he said. So as to retain the company in the public sector, the Government, management and the employees have come to a consensus and signed the MoU, he said.

According to the MoU, the Industries Department would reconstitute the board of directors of the company by inducting experts in this discipline. The other commitments of the department include granting of autonomy to the management of the company for the smooth running of the unit and for its speedy modernisation, he said.

Meanwhile, the Finance Department in accordance with the revised Budget for 2006-07 would make available Rs 3 crore immediately. The Government loans would be converted into equity of the company besides initiating steps to arrive at a one-time settlement with SBT for the outstanding loan amounting to Rs 2.25 crore. The department would also take action to facilitate payment of outstanding sales tax dues in instalments.

The Government would also make available financial assistance for developing the company's infrastructure, modernisation and to liquidate long-pending dues.

Health Dept move

The Health Department, as per the MoU, would initiate action to buy all the drugs manufactured by KSDP. While placing the orders with the company, the department would pay 65 per cent of the total cost in advance as working capital. It would also direct the Hospital Development Committees to buy the drugs from KSDP instead of from the open market. It would be developed as a captive manufacturing unit of the Health Department in the future.

The departments of Cooperation and Devaswom would also assist the company by buying the products from it.

The labour unions had also agreed to assist the management in its revival, modernisation and progress by following a suitable work culture and cooperation.

The MoU was signed by the Industries Minister, Mr Elamaram Kareem; the Finance Minister, Dr T.M. Thomas Issac; the Health Minister, Ms Srimathi Teacher; the Cooperation and Devaswom Minister, Mr G. Sudhakaran; the KSDP Managing Director, Mr R. Rajagopal; and trade union leaders and head of Officers and Staff Associations.

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