The Centre's decision to sell off Hindustan Antibiotics Ltd, once a prestigious public sector drug company, is now final. The stage is thus set for the end scene of a sad drama of mismanagement and neglect of a government undertaking. All the talks of its revival and rehabilitation have come to an end some time ago. The Union ministry of chemicals and fertilizers is expected to hand over the PSU to K P Sales Group, a Mumbai-based pharma trading company being qualified as the final bidder for the take over. The deal was subsequent to an open bid invited in June 2002 by the Industrial Development Bank of India, the operating agency appointed by BIFR. As per the deal, K P Sales would bring in just Rs 5 crore for the acquisition of HAL. This amount is expected to be used for a Rs 15 crore VRS package agreed upon to retire the 2,023 workforce on HAL's rolls. The government will be offering Rs 10 crore to the new promoter for settling the dues of the employees under the VRS. No doubt, the new promoter has to undertake all the current outstanding liabilities of HAL. These liabilities mainly loans from banks and financial institutions are estimated at Rs 65 crore. Against this, K P Sales is getting a company with assets valued at Rs 750 crore. HAL has a land area of 350 acre, a functioning plant & machinery and 54 brands, mostly pharmaceuticals. HAL is also the majority stakeholder in Karnataka Antibiotics and Pharmaceuticals Ltd and Hindustan Max GB, another joint venture.
HAL was declared sick in 1995 by BIFR and a new management, headed by a senior bureaucrat, had taken charge since then. And from 1997 HAL has been showing improved working results after some restructuring of its operations including shutting down of some of its loss making facilities. In 1999, BIFR sought a fresh rehabilitation package from IDBI for reviving the company. HAL management had also obtained permission from the Maharashtra government for sale of its excess land for funding the rehabilitation plan. In fact, HAL has been showing operating profits from 2000 onwards. With the sale of its excess land, the current management of HAL could have easily settled all its dues and turned it into a profitable enterprise in one year's time. There is no business, therefore, for the Union C&F ministry to intervene at this stage and decide to sell off the whole undertaking for a song. The final decision for revival or sell off or a change of management should have come from BIFR as the unit has been referred to it by the government itself. The policy of government exiting from all areas where the private sector is active is understandable. But, in any sector if a PSU operates successfully and can compete with private sector units, it should be allowed and encouraged to exist. In pharmaceuticals industry where even large units tend to compromise on quality and safety today, existence of a successful PSU could have ensured quality medicines at least to government's requirements. The Central government's annual procurement of medicines alone run into several hundreds of crores of rupees.
Compiled from WWW by
Dr. Venkat Appaji Padmanabhuni
email : appajipv@hotmail.com