New Delhi-based Bharti Healthcare Limited (BHL), which belongs to the Rs 500-crore Bharti Enterprises, began its operations low-key in 1982 when established players like Associated Capsules had already acquired an enviable presence. Since then, the company has crossed many milestones and carved a niche in the Indian pharmaceutical market by starting the manufacture of a vital component of medicines _ hard gelatine capsules.

The company had already at this stage had a short stint as a marketing arm of Stryker Corporation of US. A C Srivastava, chief executive officer (CEO) of Bharti Healthcare Limited, spoke to Arvind Sen of indiamarkets about his company's efforts to become the number two company in India and capture a substantial market position in the US and European countries where even a few years back, Indian products were looked down upon.

indiamarkets: What happened to your arrangement with Stryker Corpn and when did the company start manufacturing gelatine capsules?
Srivastava: Yes, it is true that we had exclusive marketing rights for surgical and medical products. These products included orthopaedic implants, powered surgical instruments, endoscopic systems, and patient care and handling equipment of Stryker Corporation of USA.

But we realised that we did not just want to be a marketing arm of another company, so we decided to move out of the relationship with Stryker by the end of 1996. We decided to have our own production and not be a dealer. As for the entry into manufacture of gelatine capsules, we are not new to it. In fact, we had commissioned the manufacturing facility for gelatine capsules in 1982, but production started only in 1984. The company today has 13 machines which have been imported from the USA. A single machine, which has 7,000 moving parts, has a production capacity of 10 lakh capsules per day per machine. Besides, we are also in the process of getting more machines for different sizes of capsules.

indiamarkets: What have been the investments in setting-up the manufacturing unit, and what is the total production capacity?
Srivastava: Today, Bharti has a Rs 40 crore state-of-the-art manufacturing unit at Dharuhera in Haryana, which has a production capacity of more than 4.5 billion capsule-shells. Though we are the second largest manufacturer of hard gelatine capsules in the country, we are the single largest manufacturer as per single unit. Today, we not only manufacture 93 per cent A-grade capsules, but also print on the capsules as per the requirements of the client.

indiamarkets: What is the total size of the gelatine capsules market and what is Bharti's share in it? At what rate is the Indian market growing?
Srivastava: The total market for gelatine capsules in the country is a whopping 20 billion capsule pieces per year, and our share is more than 20 per cent, and the demand is increasing at a steady rate of more than 10 per cent per annum.

indiamarkets: Given the fact that the manufacture of gelatine capsules requires lot of modern technology and sophisticated equipment, has Bharti tied-up with any international player in this field?
Srivastava: We have a strong technology back-up with a number of strategic alliances, but the most important relationship is with Evergreen Packaging Equipment (formerly known as Cherry Burell), from whom we have the technical know-how and the plant equipment have also been sourced from them.

indiamarkets: In a situation where other players are present in the Indian market, how do you face the competition?
Srivastava: The main strategy to keep our competitors away is by way of constant investments, and by following Good Manufacturing Practices (GMP), capacity to expand infrastructure as and when required, and finally to cater to high-quality conscious customers. As a marketing strategy and in order to expand customer base, we have been very selective in choosing our clients, and this is evident from the fact that half of our revenue comes from only nine of our clients.

Clients who want quality and hygiene come to us. Besides, the company is also the first one in the country to introduce colour-coded capsules with 100 per cent colour matching facility as per the requirements of the clients. BHL has already introduced "Size 4" hard gelatine capsules in the Indian market, and has also started production of "00" or elongated Zero, for which the company has installed new machines and equipment. The company has already been accredited with ISO 9002 certification, which gives us an added advantage in the international markets. We have also installed a new Effluent Treatment Plant for our manufacturing unit.

indiamarkets: What plans does Bharti have for the future?
Srivastava: We have always been in the process of constant expansions and it is clear from the fact that while we had three machines in 1985, we have 13 in all today. In fact, we are going to add few more as and when needed for the ever-expanding market for gelatine capsules.

indiamarkets: Is Bharti exporting hard gelatine capsules to other countries and what has been the growth rate? What has your experience in the US been?
Srivastava: Pricing of capsules plays a vital role, as one can clearly see that the product which costs US$ 1.5 in Sri Lanka, costs US$ 3 in the United States. Therefore, it is a good business decision and we are exporting our products to countries such as Iran, Sri Lanka, Malaysia, Hong Kong, Thailand, Syria, Bangladesh, Cyprus and the United States of America, whereas Europe and Vietnam are our new export markets. As far as exports are concerned, we have been achieving an export growth of 100 per cent, and with the nutraceutical market expanding in the United States at the rate of 40 per cent, we hope to see more and more export growth.

We have already exported goods worth US$ 1,491,782 till 31st March, 2000 and have yet to fulfil export obligations of US$ 905,938 & US$ 1,461,600 till March 2001 and till 30th September,2007 respectively against import of plant and machinery.

indiamarkets: What are the factors which hamper the growth of the hard gelatine capsule industry in India, and what according to you should the government do, so as to give a boost to this industry?
Srivastava: There are no export incentives and encouragement from the government to help increase exports. The Indian market is fragmented, there are no DEPB rates for capsules and if the government gives DEPB benefits to the industry, only then can it develop to a desired level. Besides, the airports should also have proper storage facilities. Since hard gelatine capsules are very climate-sensitive, it is very important to provide proper handling facilities at the airports; a slight raise in temperature can spoil the whole consignment. Besides all this, the freight charges are very high, for example Indian Airlines' freight charges range from Rs 24.90-34.90 per Kg. This in turn raises the overall cost of medicines for the end-users or the customers.