Ajanta Pharma: Turn Around Man

Ajanta Pharma’s turnaround has been a landmark in India’s pharmaceuticals sector. Its transformation from a debt-ridden, low-growth company to being one of the fastest growing one in about a decade owes not just to its young management’s bold and risky decisions but also to the astute financial control exercised by Arvind Agrawal, a low profile finance man.

Agrawal, the 53 year-old chief financial officer of Ajanta Pharma, is one of the key persons credited with the big change in the 40-year-old company’s fortunes. A qualified chartered accountant and a law graduate, Agrawal’s first and most important contribution to the company’s transformation was its successful public issue in 2000, two years after he joined it. Then, the company was afflicted with falling growth and huge debt.

A rank holder in the 1984 batch of the Institute of Chartered Accountants, Agrawal started his career with IDBI, then one of the leading financial institutions in the country. After a short stint as an investment banker, he joined Ajanta Pharma in 1998.

Immediately after joining the company, he started streamlining the processes. He also assisted in the transformation of the company by working in tandem with the current management since 2003. While managing director Yogesh Agrawal and joint managing director Rajesh Agrawal — the young generation promoters — were devising the strategy to penetrate the domestic and international markets including the US, Middle East, Africa and CIS, Arvind Agrawal was playing his part by raising required resources, monitoring the deployment of resources and focusing on enhancing the efficiency of the organisation in all spheres.

During the last one decade, the working capital cycle of the company witnessed substantial improvement, with inventory days reduced to 40 days and the credit cycle reduced to 65 days (as on 31 March 2015). This was the result of a strict discipline in terms of recovery and close monitoring of inventory levels across the organisation. From a peak total debt of Rs 250 crore in March 2009, the company boasts of a net cash balance and liquid investment of Rs 136 crore in March 2015. Ajanta achieved highest return on net worth (RONW) of 43 per cent and return on capital employed (ROCE) of 52 per cent for the year ended 31 March 2015.

While Agrawal always leads from the front, his guidance and mentoring has always been the strength for the team, his colleagues say.