Cabinet okays sale of India's first pharma firm

Pic for representational purpose only

New Delhi: In the second strategic sale approval in over 12 years, the Cabinet Wednesday cleared the sale of India's first pharma company Bengal Chemicals and Pharmaceuticals Ltd as well as Hindustan Antibiotics Ltd after selling their surplus land.

The Cabinet headed by Prime Minister Narendra Modi also approved closure of Indian Drugs and Pharmaceuticals Ltd (IDPL) and Rajasthan Drugs and Pharmaceuticals Ltd (RDPL).

The strategic sale approval is just the second in over 12 years. In September, the Cabinet had cleared strategic sale of Bharat Pumps and Compressors Ltd.

These will be the first privatisation since sale of Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpayee.

BCPL and HAL are among the public sector units that NITI Aayog has identified for sale of government's majority stake to private companies in order to bring in greater efficiency and professionalism in their functioning.

At today's meeting, 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 said.

Proceeds from sale of land, which would be done through open tender, will go towards meeting liabilities of the companies, including paying for VRS for employees.

Bengal Chemicals and Pharmaceuticals Works Ltd, the previous avatar of BCPL, was set up in April 1901 by eminent scientist and entrepreneur Acharya Prafulla Chandra Ray.

The government of India took over the management of the company in December 1977 and nationalised it in 1981, renaming it Bengal Chemicals and Pharmaceuticals Ltd (BCPL).

From its factory at Panihati, near Kolkata, BCPL makes anti-malaria tablets Chloroquine and Paracetamol, among a host of other drugs and industrial chemicals.

HAL was the first drug manufacturing company to be set up in the public sector by Government of India with active co- operation of WHO and UNICEF.

The statement said sale of surplus land before sale or closure would help utilise the assets in the best national interest.

"The sale would be through open competitive bidding to government agencies and the outstanding liabilities will be met from the sale proceeds," it said.

Voluntary Retirement Scheme (VRS) / Voluntary Separation Scheme (VSS) will also be implemented in the four loss-making units.

"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, the administrative department for these undertakings, will take time bound follow-up action," it added.

After sale of surplus land, the remaining part of the land will be managed in accordance with the guidelines of the Department of Investment and Public Assets Management (DIPAM) and Department of Public Enterprises (DPE).

The government is targeting Rs 56,500 crore in disinvestment proceeds this fiscal. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.

The fiscal target continues to remain far off with total collections of about Rs 24,000 crore in the nine months of the financial year so far.

The last strategic sale took place in Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpayee, when 72 percent of government stake was sold to Indo Wagon Engineering for Rs 18.18 crore.

Incidentally, the first strategic sale in a PSU also happened under the NDA rule in 1999-2000 when the government sold 74 percent equity in Modern Food Industries to Hindustan Lever for Rs 105.45 crore.