Cabinet okays sale of two pharma PSUs, closure of two others

Source: Business Standard, Dec 29, 2016

New Delhi: The government will explore the option of strategic sale in Bengal Chemicals & Pharmaceuticals (BCPL), India’s first pharma company, and Hindustan Antibiotics after selling their surplus land. It will close down two other ailing pharma firms – Indian Drugs & Pharmaceuticals (IDPL) and Rajasthan Drugs and Pharmaceuticals (RDPL).The Cabinet on Wednesday cleared these decisions. BCPL and HAL are among the public-sector units (PSUs) that NITI Aayog has identified for sale of government’s majority stake to private companies, in a bid to bring in greater efficiency and professionalism in their functioning.

The Cabinet “approved the sale of surplus land of HAL, IDPL, RDPL and BCPL, as would be required, to meet their outstanding liabilities,” an official statement stated. “After meeting the liabilities, steps will be taken to close IDPL and RDPL. The option of strategic sale will be explored for HAL and BCPL. The Department of Pharmaceuticals will take time-bound follow-up action.” In September, the Cabinet had cleared strategic sale of Bharat Pumps & Compressors.

In October, the Cabinet gave in-principle approval to strategic sale and disinvestment in the public-sector units as recommended by the Aayog. Candidates for strategic sales and disinvestment will be decided on a case-by-case basis.  The government has budgeted Rs 20,500 crore from strategic sale this financial year. Nothing has been realised so far. Although it had targeted to raise Rs 28,500 crore from strategic sales in the last financial year, it could not raise any money.

The previous strategic sale had happened 12 years ago when Jessop & Company was privatised in 2003-04 under the Atal Bihari Vajpayee government. Proceeds from the sale of land of these four companies, would be done through open tender, will go towards meeting liabilities of the companies, including paying for voluntary retirement scheme for employees.

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