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HLL asset valuation for 100% divestment gathers pace; agitating unions to back partial stake sale

Arun Sreenivasan, New Delhi
Thursday, June 14, 2018, 08:00 Hrs  [IST]

While the valuation procedures for total privatisation of HLL Lifecare Ltd is moving ahead at a fast pace with the appointment of a transaction adviser, the trade unions agitating against the divestment programme have changed their initial stance and are willing to back a new proposal mooted by the company management for partial stake sale, it is learnt. The new proposal, put forward for the consideration of the union finance ministry, would help the company retain transparency in its functioning and maintain its public sector unit tag.

Despite protests from trade unions, the Union government has named advisers and consultants for the divestment programme and the preliminary information memorandum for potential bidders is expected to be ready soon.

An unlisted Schedule-B Miniratna company headquartered in Thiruvananthapuram, HLL has seven state-of-the-art manufacturing facilities, five subsidiary companies and a joint-venture arm. It recorded a total turnover of Rs.1,062 crore and profit after tax of Rs.35 crore in the 2016-17 fiscal year. The plan to divest 100 per cent government stake in HLL, which manufactures and markets the widest range of contraceptives in the world, has been denounced by the Kerala state government, various political parties and the employees union. But the Central government has decided to ignore the uproar.

“The Central government had assured us many times that the company would not be put on the block. Contrary to that assurance, they are going ahead with 100 per cent stake sale. We are still against the privatisation plan that would affect not only its 5000-plus employees, but thousands of others who have been indirectly benefiting from it. But in the worst-case scenario, we will support a partial offloading of equity that will help the government retain its control over the company. It is anyway better than a full sell-off,” Internal Chairman of Save HLL Forum Nandakumar Menon told Pharmabiz. The unions are standing united under the banner of Save HLL Forum. Dejected by the Central government’s decision, they have moved the Kerala high court against the proposal and the case would come up for hearing this month.

The company top-brass, while trying to persuade the central government to opt for partial divestment, is learnt to have cited retrenchment, labour agitation and outrage over the plan. Its assets are also not expected to fetch the projected market value in the current market conditions, another factor that may work in favour of the partial stake sale proposal.

“Offloading government stake in sick or loss-making PSUs is acceptable. But HLL is a profitable company. I’m concerned about the future of its employees. Its total privatisation will be a setback for its highly successful social sector intervention programmes,” INTUC state president and national vice president R Chandrashekharan opined.

Although the company’s asset valuation is going on in full swing, industry observers point out that the task is going to be a tall order. HLL has offices, land and lease plots in various parts of country and significant intangible assets including 30-plus trademarks and more than a dozen technology patents.

 

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