In September the Finance Ministry intends to seek offers, for the sale of HLL Lifecare after receiving approval from the Alternative Mechanism. Minister Bhagwat Kishanrao Karad has confirmed the decision to privatize despite appeals from stakeholders. The objective of this process is to improve efficiency, in the sector driven by HLL’s contributions during the pandemic in providing medical supplies, contraceptives, and pharmaceuticals.
In the upcoming month of September, the Finance Ministry is set to initiate the process of inviting financial bids for the strategic sale of HLL Lifecare. This move follows the green light from the Alternative Mechanism (AM), a body comprising key government officials, which has granted approval for the share purchase agreement (SPA), according to an official statement.
Minister of State for Finance, Bhagwat Kishanrao Karad, recently conveyed to Parliament on August 7 that the government remains steadfast in its decision to proceed with the privatization of HLL Lifecare, despite appeals from stakeholders to halt the process.
A reliable source from the government shared, “The strategic sale of HLL Lifecare is indeed progressing. We anticipate the share purchase agreement to secure AM approval in the near future. Following this, the Department of Investment and Public Asset Management (DIPAM) is expected to extend invitations for financial bids within a span of one month.”
The AM, comprising Minister of Road Transport and Highways Nitin Gadkari, Finance Minister Nirmala Sitharaman, and Health and Family Welfare Minister, has a pivotal role. The next steps involve sharing the request for proposal (RFP) and the SPA with the Transaction Adviser (TA). These documents will then be distributed to the pre-selected bidders who are eligible to submit financial bids. The RFP outlines the criteria for evaluation, serving as a formal solicitation for financial offers from potential investors.
The decision to privatize HLL Lifecare, a central public sector enterprise operating under the Ministry of Health and Family Welfare, has been met with resistance from workers. Notably, the company played a vital role in procuring and distributing essential medical supplies during the pandemic. Its diverse portfolio includes the production and marketing of contraceptives, women’s healthcare products, hospital supplies, and pharmaceutical goods.
Although numerous bids were received in March 2022 for the privatization of HLL Lifecare, the process of strategic sale has been lingering.
Karad defended the government’s strategy, explaining that strategic disinvestment aligns with the notion that as industries mature, the private sector can unlock the full economic and employment potential of enterprises while channeling public resources towards social sectors and infrastructure development. His rationale was detailed in a written response to Parliament.
Addressing concerns about employee welfare throughout the divestment process, Karad highlighted that the disinvestment terms include provisions for employees. Furthermore, he pointed out that post-privatization, employee prospects are expected to improve alongside increased production, productivity, and profitability.
In 2022, the Department of Investment and Public Asset Management (DIPAM) initiated the process by inviting preliminary bids for the complete divestment of the government’s stake in HLL Lifecare. Notably, the Kerala State Industrial Development Corporation (KSIDC) expressed interest in participating in the auction. However, despite the Kerala government’s bid as a consortium leader, their Expression of Interest (EoI) did not meet the required eligibility criteria and therefore could not progress further.
