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Arun Sreenivasan, New Delhi March 07 , 2018
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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