Paswan may keep IPCL out of IDPL revival package

NEW DELHI: This has the potential to snowball into a full-blown tussle between India’s largest company Reliance Industries and the government. The issue relates to a loan taken by ailing public sector drug maker Indian Drugs and Pharmaceuticals (IDPL) from Reliance-owned Indian Petrochemicals Corporation (IPCL) when the petrochem major was a state-owned entity under the ministry of chemicals and fertilisers. Now, the same ministry is against the idea of returning the loan.

A Rs 3,222-crore revival package for IDPL, approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE) earlier this month, recommends a one-time settlement of about Rs 361 crore to state governments, banks and public sector companies from which the company had borrowed earlier.

The government’s logic is IPCL is no longer a public sector company and therefore, need not be considered for the one-time settlement. The ministry is now negotiating with the lenders to reduce the amount for the settlement.

The revival scheme involves a fresh interest-free loan of Rs 250 crore and a waiver of Rs 2,861 crore plan loan. To raise funds for the settlement, the company would sell its installed machinery for making bulk drugs, which is estimated to fetch about Rs 250 crore.

Cheap Chinese imports have made the bulk drugs business unviable in many therapeutic areas and many bulk drug makers are migrating to formulations.

Although sick, IDPL has huge real estate assets at prime locations, which could fetch the company more than the turnover of the domestic pharmaceutical industry. However, sale of surplus land is not a priority although it is the easiest way to lift the company from the red. Many companies in the past, including Ranbaxy, had shown interest in acquiring the firm. The antibiotics maker has five units at Gurgaon, Chennai, Hyderabad, Muzaffarpur and Rishikesh.

Once revived, it would get orders to produce medicines for the national health programmes under the new purchase preference policy. The revival scheme for IDPL promises orders worth Rs 50 crore in the first year itself, in addition to orders from state governments. The scheme would now go to the Cabinet.