The company board has cleared the decision to lease out its five fermenters to Searle at an annual fee of Rs 2.5 crore with an agreement that Searle take on HAL personnel, numbering between 100 and 125. However, clearances are awaited from the government and from the Searle board. The clearances are expected to be in by the end of October.

Searle is expected to begin production of Vitamin B12 initially since it does not hold a licence for the manufacture of Vitamin B2, which is reserved only for public sector companies.

Industry sources therefore pointed to the likelihood of Searle beginning with the manufacture of vitamin B12 first while it acquires a licence forvitamin B2.

HAL, with its accumulated losses of Rs 140 crore as of March, 1998, is looking for opportunities to utilise its existing un-utilised facilities. Its five fermenters, to be leased to Searle, have been lying idle for over a year. These fermenters were used for the manufacture of streptomycin, which is being phased out due to cheaper alternatives and the decade old ban on it by the Drug Control Authority.

Since Searle will also take, on secondment, workers of the unit, this would mean a reduction in HAL's wage bill, sources said. It has already done so in the case of seven to eight scientists working on the pilot plant. Searle has been using the pilot plant for the past couple of months, sources indicated.

HAL is in talks with other pharma companies for a similar arrangement for its gentamycin plant. Among those it is talking to are Searle and MaxGB. HAL already has a joint venture with MaxGB.

The HAL board is believed to have agreed to the proposed lease although a memorandum ofunderstanding (MoU) is still to be signed, following which the government and the concerned ministry have to vet it.