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Govt pays no heed to protests, moves to select asset valuer for HLL divestment
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Arun Sreenivasan, New Delhi
March 07 , 2018
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Defying strong protests by the Kerala state government and the employees
unions, the Central government is going ahead with its plan to divest
100 per cent stake in HLL Lifecare Ltd, a Miniratna company
headquartered in Thiruvananthapuram. HLL, an unlisted Schedule B
company, has the distinction of manufacturing and marketing the widest
range of contraceptives in the world. It has seven state-of-the-art
manufacturing facilities, five subsidiary companies and a joint-venture
arm. In the last fiscal, its total turnover reached Rs.1,062 crore and profit after tax touched Rs.35 crore.
In
a move that is expected to further anger the state government and the
workers’ joint action council, the ministry of health and family welfare
has invited proposals from reputed asset valuers to complete the
valuation process of the profit-making company to expedite the
privatisation programme. Eligible firms are asked to submit their
proposals before March 20.
“The move to privatise a public
sector company, which has Miniratna status and offers jobs to more than
3,500 people, is illogical and unacceptable. We will go to any extent to
block this attempt to sell off national assets,” INTUC state president
and national vice president R Chandrashekharan told Pharmabiz. A joint
action council of HLL employees is on an indefinite stir against the
disinvestment proposal.
The Union government is banking on
‘strategic sale’ of several state-owned companies and properties to meet
its divestment target of Rs.800 billion
for fiscal 2019. The NITI Aayog has recommended disinvestment of 100 per
cent of the government equity in HLL Lifecare through a two-stage
auction process. The present plan is to retain vaccine unit HLL Biotech
Limited (HBL) and HLL Medipark, its two subsidiaries, as special purpose
vehicles.
As per the terms of reference (ToR) provided by the
ministry for potential valuers, “the valuation is to be done keeping in
view the objective of divestment”. The valuer can use methods such as
comparison, income capitalisation, discounted cash flow and replacement
valuation for the purpose. The interested entity should have completed
at least three valuations of assets worth Rs.75 crore or more each during the last three years. Consortium bids will not be allowed.
The
bid to add a successful company like HLL to the divestment target list
is fuelling outrage. Kerala Chief Minister Pinarayi Vijayan has already
written to Prime Minister Narendra Modi to express his disappointment.
"Kerala government gave 19 acres and all support to the company
established in Thiruvananthapuram in 1966 as Hindustan Latex Ltd, and it
achieved a huge growth over the past five decades," he said in his
letter.
According to official sources, the selected valuer is
required to complete the work, including submission of the valuation
report, within a period of 60 days from the date of issue of Letter of
Intent. There will be a pre-bid meeting on March 12 and the prospective
bidders could send their queries by March 8.
When trade union
delegations, under Save HLL Forum, met Finance Minister Arun Jaitley
recently, the minister had assured them that the disinvestment proposal
was only a recommendation of the NITI Aayog and the final decision was
not taken. But the latest move by the government to select an asset
valuer proves that the public sector entity is certainly on the block.
“We
are not against offloading government stake in sick or loss-making PSUs
as it would be a drain on the national exchequer. But HLL is not just
another company. As a trade union leader, I’m concerned about the future
of its employees post privatisation. But more than that, this company
has played a major role in family planning promotion and women
empowerment in the state. Its social sector intervention programmes are
highly successful and well-regarded by one and all,” Chandrashekharan,
who is also an International Labour Organisation governing body member,
pointed out.
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