HAL and RCF divestment gains momentum

Our Corporate Bureau
19 January 2004

These firms are bidding for acquiring all the existing businesses and infrastructure of HAL and its three other joint ventures, Karnataka Antibiotics Ltd, Maharashtra Antibiotics and Pharmaceuticals and a penicillin manufacturing JV with Gist Brocades.

HAL was referred to the Board of Industrial and Financial Restructuring (BIFR) three years ago as its financial losses kept on growing. The BIFR appointed the Industrial Development Bank of India (IDBI) as the nodal agency for finding a suitor for the PSU as part of a turnaround programme for the company.

A senior IDBI official said: "During the BIFR hearing held on December 18, four takeover proposals including one from the current HAL management came up before the board. The BIFR has given a month's time for the bidders to carry out the due diligence."

The bidding price for HAL could not be ascertained immediately. Industry sources said among the current bidders, Sun Pharmaceuticals may emerge as the possible acquirer because compared to Sun the other bidders are smaller in size and the HAL management has to bring in an outside investor to acquire the company.This gives Sun Pharma an upper hand in the bid process.

HAL, which has its plants at Pimpri, near Pune, produces a range of antibiotics, anti-tuberculosis drugs, anti-bacterials, analgesics, cardiac drugs, vitamins and biotech drugs like erythropoietin.

HAL has also leased out a pilot plant to RPG Life Sciences for production of vitamin B 12. Following IDBI's recommendation, BIFR had earlier suggested winding up of the PSU. The government as the promoter, also refused to support a turnaround of the company by infusing fresh funds.