Centre acquires controlling stake in 2 drug firms
02 Jan 2009
The government has raised its stake in two key pharmaceutical companies - Karnataka Antibiotics & Pharmaceuticals Ltd (KAPL) and Rajasthan Drugs & Pharmaceuticals Ltd (RDPL) - through transfer of equity stake, a government release said.
It bought 100-per cent stake in Bangalore-based KAPL through transfer of equity shares held by Hindustan Antibiotics Ltd (HAL), Pune to the President of India and additional investment of Rs7.10 crore by the government.
The government also bought full control of Jaipur-based RDPL through transfer of equity shares held by Indian Drugs & Pharmaceuticals Ltd (IDPL), Gurgaon to the President of India and additional investment of Rs2.00 crore by the government.
Karnataka Antibiotics & Pharmaceuticals Ltd is a joint venture company promoted by Hindustan Antibiotics Ltd and the state government of Karnataka through Karnataka State Industrial & Investment Development Corporation (KSIIDC).
Rajasthan Drugs & Pharmaceuticals Ltd is a joint venture company promoted by Indian Drugs & Pharmaceuticals Ltd and the state government of Rajasthan through Rajasthan Industrial Development Investment Corporation (RIICO).
KAPL proposes to upgrade its manufacturing facilities and also set up a new Cephalasporin plant at an estimated cost of Rs22.45 crore. RDPL proposes to upgrade and modernise its existing manufacturing facilities at an estimated cost of Rs8.75 crore.
Both KAPL and RDPL are profit making companies. Whereas the holding companies viz. HAL and IDPL being sick companies are being revived. HAL and IDPL are unable to support KAPL and IDPL respectively in modernising and upgrading their manufacturing facilities.
Equity base of both KAPL and RDPL is too low to enable them to raise additional loan from banks and financial institutions, the release pointed out.
In order to help KAPL and RDPL in their plans to upgrade their manufacturing facilities, both the companies have been brought under the direct control of the central government. The equity shares held by state governments through their PSUs in KAPL and RDPL would continue to be held by them in the same proportion. The equity of the Government of India and respective state governments in KAPL would be 59:41 and in RDPL 51:49 as before.
The decision would also help KAPL and RDPL to develop and grow further and stay competitive as also to cater to the requirement of people and provide good quality medicines at reasonable rates, the release added.