Hindustan Latex Ltd's plan to take over the sick Kerala State Drugs and Pharmaceuticals Ltd Industries may be delayed indefinitely. The Kerala Government is yet to respond to the conditions put forward by Hindustan Latex five months ago.
Informed sources told Pharmabiz that the State Government had taken a decision to transfer KSDP to HLL early July this year, while reacting to the Expression of Interest (EOI) from HLL. Subsequently a Memorandum of Understanding (MoU) was signed between the two parties. However, the state industries department is yet to respond on the takeover terms and conditions put forward by HLL, many months since then.
Sources attributed the delay mainly to the standstill in administration due to an ongoing sex scandal controversy related with the industries minister P K Kunjalikkutty, than the government's stand on approving the terms and conditions of HLL.
When contacted, Chandrasekharan Nair, general manager (Corporate Affairs) of HLL confirmed that the industries department is yet to respond positively on the proposal, and indicated the takeover process may by delayed indefinitely.
"So far we have not received any feedback from the Kerala Government on our proposal. Once we get it, we have to go for a due diligence study, and then only will finalize the details of the takeover like whether to take formulation plant alone or including the Vitamin A plant. The study may last minimum two months to six months and the whole process may require many months. Everything depends on government's interest and attitude," said Nair. However, he declined to divulge details of the terms and conditions and other modalities of transfer proposed by HLL.
Meanwhile, sources in Aalappuzha said recently that the government disbursed about half of the Rs 10-crore fund for VRS offered to the 170 of the 200 odd remaining employees of KSDP. The vitamin A plant is defunct totally, and the formulation division is only partially functioning.
It may be noted that KSDP had about 417 permanent employees, including 10 senior executives, nine executives and 50 supervisors, besides 156 casual workers, until a few years ago. Most of the employees of the Vitamin A division migrated to other departments on deputation, and majority of the remaining employees opted for the VRS scheme ended during November 2003. The turnover of the formulation division in 2001-'02 was only Rs 3.63 crore with a loss, Rs 2.5 crore. The vitamin A division of the company had a turnover of Rs 61 lakhs that year and a loss of Rs 1.56 crore. The company's accumulated losses now stand at over Rs 55 crore, according to sources.