After the withdrawal of the bidders from the sell-off process, the ministry of disinvestment (MoD) decided not to pursue. According to official sources, the MoD has already transferred the case back to the administrative ministry.
The process of HIL privatisation started last year. The government appointed AF Ferguson & Co as advisers to facilitate the privatisation of HIL.
Expressions of interest were invited, and a few parties showed keenness to take over the company. Bid documents were issued to the shortlisted bidders, but somehow all of them lost interest in the company.
The government had decided to sell 51 per cent of its equity to the strategic partner, along with the transfer of management control. The erstwhile Disinvestment Commission had recommended the same.
With its plants located at Rasayani (near Mumbai) and Udyogmandal (near Kochi, Kerala), HIL manufactures agrochemicals, pesticides and DDT. The Supreme Court ordered the closure of Delhi unit because it was causing pollution.
It is a loss-making company, with accumulated losses exceeding Rs 21 crore. In 1999-2000, it incurred a loss of Rs 14.08 crore, up from Rs 5.58 in the previous fiscal and Rs 1.64 crore in 1997-98.
The company’s balance sheet would have been even worse, had it not been for the government’s largesse.
While there is a ban on the use of DDT as a pesticide, it is still used for purposes of community health. The health ministry purchases DDT in good amount from HIL.
HIL has an authorised capital of Rs 60 crore and a paid-up capital of Rs 50.75 crore. The government holds the entire equity.
Incorporated in 1954, HIL set up its factory in Delhi for manufacture of DDT to meet the demand of the National Malaria Eradication Programme. The plant came as a gift from the World Health Organisation and went into production in April 1955.
Depressed market conditions, overstaffing, obsolete technology and outdated machinery are cited as reasons for HIL’s bad performance.