City Pharmacy Ltd’s recovery from a devastating 2017 fire has been one of the more remarkable comebacks in Papua New Guinean business. But Chief Executive Mahesh Patel tells Business Advantage PNG there is still a long way to go.

CPL’s Mahesh Patel. Source: Business Advantage International

The fire destroyed CPL’s Port Moresby head office and main warehouse on June 18, 2017.

Patel says that the main issue was that the company records were ‘wiped out’.

There was a back-up, but because of intermittent power, some files had been corrupted.

‘We lost about six-to-eight days of data. We had to rebuild that, but the basic backbone was still there.

‘To bounce back from such a disaster to a temporary office in just two weeks—that was phenomenal.’

‘Credit goes to the team; we had some limited space within one of the rooms in our rental property.

‘We were able to set up a temporary office within two-to-three weeks. That was quite a bounce back.’

The June 2017 fire devastated CPL’s head office and main warehouse. Source: CPL Group

People

Patel says the response from staff was surprising and impressive.

‘To bounce back from such a disaster to a temporary office in just two weeks—that was phenomenal.

‘I had a town hall meeting two days after the fire to give faith to people to hang on, that we would survive.

‘Many Papua New Guineans had been with us for 25 years.

‘They thought that this was the end of it—that we wouldn’t bounce back and the company was doomed.

‘We are fixing a lot of internal issues. With the fire the whole organisation went into survival mode.’

‘There was lots of tears, lots of emotion. One Papua New Guinean wrote an email saying she would work for free to get the company up and running.

‘I am in awe, really. Our strength is our people.’

Inventory

Patel says there was an inevitable drop in inventory, and the company also lost some customers.

‘Obviously, once you lose the customers it is very hard to bring them back.‘

He says the company is still replenishing its stock and is using five temporary warehouses.

‘We are fixing a lot of internal issues. With the fire, the whole organisation went into survival mode.

‘He stayed around for a capital raising; a rights issue in 2017. Then the fire hit.’

‘All the processes and all the systems were broken and we need to rebuild all that—we are rebuilding that.

‘We are putting a lot of efficiencies back into the company but longer term we are dependent on the economy.’

Support from CPL’s insurer was also critical.

‘Luckily, we changed the insurer and they have been extremely supportive. Otherwise we would not have existed today.’

Succession

Patel says that as part of sound corporate governance he had made steps to organise a replacement for himself.

‘I had a three-year succession plan and then I was going to be out.’

He stayed around for a capital raising; a rights issue in 2017. Then the fire hit.

‘A lot of people were saying: “If the founder is walking away from the business then why should we reinvest into the company?”

‘So I stuck around for a while and luckily we had some new shareholders.

‘Part of their deal was that they would feel comfortable if I got back in there and steadied the ship.’

Now, Patel is expecting to remain in charge as CEO for the longer term.

He observes that most of CPL’s competitors are not corporates. This has shaped his thinking.

‘(The competitors) are all family-owned businesses.

‘So, while we are a public company, I keep saying to people there needs to be a fine line between corporatising and becoming so bureaucratic that in the end you won’t exist.

‘We need to build that culture up again and I don’t think I can get away in a hurry.’