Tale of a local Pharma Man

Let’s begin with a snapshot of Jammu & Kashmir pharmaceutical industry.  Experts say J&K is loaded with huge potential to become a hub for pharmaceutical industries in India. A research report – Pharmaceutical Sector: The untapped potential of J&K – prepared by an agency EY, pegs it as a rapidly growing sector at a faster pace. The agency has quoted policy support, existing ecosystem, abundant intellectual manpower, large domestic market and access to largest markets as the advantages Jammu & Kashmir has in the pharmaceutical sector.

As far as J&K Industrial Policy 2016 is concerned, it has identified pharmaceuticals as thrust sector and offers attractive incentives for investors.  It lists existing ecosystem as a hub of leading Indian pharma companies such a Lupin, Sun Pharma and Cadila Pharma. The agency has  estimated that Jammu & Kashmir occupies 4% of north Indian market and 1% of Indian pharmaceutical market with a market value of Rs. 1300 crore and growing at 8% per annum.

But the statement of facts put in the research report are not matching the ground realities and Jammu & Kashmir is yet to build on its pharma base. Greater Kashmir Business Editor talked to a local veteran pharma industrialist, Kumar Wanchoo, who established a pharmaceutical manufacturing unit four decades ago, to know the scope of pharma entrepreneurship in J&K. Having a huge experience of over 40 years in the pharmaceutical trade and manufacturing, he expressed astonishment when he, a few months back, first time came to know that in JK Industrial Policy 2016 pharmaceuticals sector is mentioned as a thrust sector! Where is the thrust? He questions.

Even as we tried to keep our interaction with Kumar Wanchoo around pharma sector in J&K, he dished out more about general industrial scenario in J&K and the guidelines which a local entrepreneur should take into account while pursuing entrepreneurship. He shared his journey as an industrialist and as an entrepreneur. 

Excerpts of the interaction:

Would you like to share details of your journey as an industrialist in pharmaceutical sector?

I developed a passion for entrepreneurship in pharmaceutical sector during my college days. I was in pharma distribution trade when I was a student. I went to Ahmadabad, visited some pharma laboratories and my passion further cropped up. In the year 1978, State Bank of India in Kashmir started an entrepreneurship training programme. I also applied and was among among the 25 selected for the programme. IBCON Ahmadabad and SBI jointly conducted the training programme for one month at MLA hostel Srinagar. It was one of the best programmes where we were told about finance, production, marketing and all ins and outs of industry in detail were discussed. A lot of written material was also given to us and this programme gave us real concept of industry.

20 out of 25 candidates initiated to set up industrial units in Kashmir as well as in Jammu. I was one among them. I started a project report on formulation of pharma products – liquid/ tabs/ capsules. This journey was for passion of self-reliance of our state and employment generation and strengthening the economy of the state.

So I started a pharmaceutical manufacturing unit under the name and style Eaton. We started production in 1981. JKSFC and Bank of India sanctioned loan to the tune of Rs.7.95 lacs for fixed assets and Rs.5.25 for working capital. I started from Kashmir and went to Jammu, Punjab, Haryana and parts of Utter Pradesh.

First couple of years were very tough. But we crossed the breakeven in 1988. We could have expanded to other states but unfortunately in 1990 we had to stop for a year resulting in closure of our operations outside Kashmir.

We restarted the unit in 1991 and concentrated on J&K because due to financial constraints we could not restart operations outside J&K. Till date from 1991 we are operating only in J&K and have generated employment.

What are your future plans? 

See, by the grace of God, I have paid all loans and no liabilities are pending against me as on date.

But I have decided to quit. 

Why quit?

Unfortunately now I feel that the policies of the government have not been encouraging. After putting almost 40 years of my precious life in the field, I have come to the conclusion that the government policies have always been bureaucratic and the government never consulted entrepreneurs or their associates in framing policies which would have resulted in encouragement to entrepreneurs for setting up industrial units. For example, excise relief for setting up units in J&K state didn’t help the local entrepreneurs. Those operating outside J&K have established units in Jammu to avail excise relief while as a local unit should have been encouraged. 

Very recently I came to know that 2016 industrial policy envisages pharma is a thrust area which can generate employment. Till date we don’t see a single pharma unit established. Government never bothered to check why local units are not participating in setting up pharma units in J&K.

According to me, the incentives for setting up pharma units in J&K should have been made area specific. For example, establishing unit in Kupwara and other similar far-off locations should have been incentivized. Giving a general incentive to establish unit at the choice of investor’s location doesn’t serve purpose. It has become a big disadvantage to the local industrialists 

You mean policies are not encouraging for local industries?

Yes. You will be surprised to know that at present a unit of 40 years old and a fresh unit is on same page which does not allow the fresh units to progress and be remunerative. 80 percent of our industrial units don’t have Rs.1 Cr turnover. While as a fruit-seller on the streets too has a turnover of Rs. 1 Cr and even more.

The departments connected with industries never work in coordination. An environment has been built around industries platform that people focus more on grabbing subsidies than running the industrial unit successfully. There should have been production-incentivized subsidies. Subsidies are misused. Corruption is to such an extent that unit holders don’t get their due share.

Flaws in industrial policies have turned industrial units as one-man show. No proper training given to unit holders. EDI should get survey done to map the impact of their schemes in the market. I am sure they will get disappointed.

There should have been marketing support from the government to the industrial unit for at least three years to strike a breakeven. There should have been facilitation from the government which directly is related to health, quality and corruption-free culture. Industrial scenario is confronted with corruption, victimization, and Kashmiri put against Kashmiri. Precisely, policies have always been anti- industries.

Take the case of industrial estates. We have huge fixed investment in these industrial estates. How many units we which produce a product? There is no attraction for unit holders to generate employment.

I remember that Dr. Haseeb Drabu, as chairman of J&K Bank, suggested having a data about industrial units in J&K. But it never took off. He was ready to assist. Local business organizations were supposed to prepare a data base to frame a policy in future, but it didn’t happen.

Entrepreneur deserves respect in society as well as in government, which has been lacking and never recognized.

What are the tips for young ones to become successful entrepreneur or an industrialist?

The person running the industry should necessarily be well versed with production, HR development, sales. Financial management is very important. You cannot use even one rupee of loan for non-production purpose. Use working capital for raw material and have raw material in abundance

Marketing position is very important. So the activity one is taking up should have scope. Precisely, 

First learn management of finance

Survey market

Prepare DPR on real assessment without keeping in mind how much subsidy he is getting and ask the government for 3 years sales support.

Never start a unit under financial constraints.

Ensure loans are spent on the basis of units viability

Goal should be fixed.

Manufacture a quality product which can be sold anywhere

Be unit focused. Raw material is important because it will product something on a day.

Upgrade the unit as per market requirement. Upgradation is part and parcel of the unit