Idpl Employees Submit Rs 157cr Revival Plan
The Indian Drugs & Pharmaceuticals Ltd (IDPL) employees' union has rejected a report from the Industrial Development Bank of India (IDBI), which states that the company has lost its commercial and financial viability. Instead, the union has suggested an alternate package involving fresh infusion of funds worth Rs 157 crore. The new package is expected to be placed before the Union cabinet this week.
IDBI had been hired to prepare a revival plan for the sick public sector undertaking, which has never made a profit since its inception in 1949. The IDBI report was based on the recommendations of A F Ferguson, which had been appointed as consultants by IDBI.
The employees' suggestion, along with four other options, will be considered by the cabinet before taking a final decision on the fate of IDPL's 7,200 employees. The four options include winding up of IDPL by offering a voluntary retirement scheme (VRS) to workers at a one-time cost of Rs 156 crore; winding up of the company with the workers receiving retrenchment allowance; implementation of the IDBI report which seeks to more than halve the workforce and pump in around Rs 710 crore; and hiving off IDPL units into separate companies or merging them with certain profitable PSUs.
As per the IDBI report, the drug company would have to reduce its workforce from the existing 7,600 to 2,400. To turn around the company, the consultants have suggested a fresh infusion of funds worth Rs 710 crore. These include Rs 104 crore as capital expenditure at the company's Rishikesh unit, Rs 6 crore as capital expenditure at its Hyderabad unit, Rs 14 crore as capital expenditure at formulations, Rs 3 crore for marketing infrastructure, Rs 117 crore for working capital requirements, Rs 156 crore towards the cost of VRS for 5,200 employees and Rs 310 crore against cash losses during implementation of the plan.
According to the report, even after the implementation of the scheme, the company would make a gross profit of only Rs 68 crore in its optimum year, namely 2002-03. Hence, IDBI pleaded that it was not in a position to prepare an acceptable and viable rehabilitation scheme.
Another option before the cabinet is the merger of all the IDPL units with profitable PSUs like Hindustan Organic Ltd or Hindustan Insecticides Ltd. In fact, two of IDPL's five units