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Delay in fund infusion hits IDPL revival
N Ravi Kumar
CHENNAI, December 29: IDPL (Tamil Nadu) Ltd -- the wholly-owned life-saving drug manufacturing subsidiary of Indian Drugs and Pharmaceuticals Ltd near Chennai -- is in dire need of an infusion of working capital to stay afloat. This, however, is not the only concern bogging the unit's skeletal staff, which originally had more than a thousand workers, as they are also against the formation of a joint venture with the private promoters to revive the unit.Speaking to The Financial Express, union leaders of the subsidiary opposed any such proposal as they apprehend that the promoters would only be interested in stripping the unit of its assets rather than putting it back on the rails. They also questioned the government's decision in this regard - to float a joint venture with private parties within 12 months failing which the unit would be closed down. Instead, union leaders claim, the unit could be revived successfully by deploying Rs 8 crore as working capital, of which Rs 2 crore should be
utilised for replacement of old and obsolete machinery. They are also annoyed about a Rs 449-crore plan, chalked out for the revival of IDPL's three units in Hyderabad, Rishikesh and Gurgaon, which is still awaiting final approval from the union ministry of chemicals and fertilisers. "The Nandambakkam unit is the only one, of all IDPL's manufacturing bases in the country, which is functioning with almost all the machinery in working condition," union office-bearers said. Inside the sprawling 123-acre unit, the 330-odd workers keep the machines busy by manufacturing instruments thereby executing small orders. However, the drug formulation division is no longer operational owing to paucity of orders. Undeterred by the fact that they have not received wages for the past two months, workers give shape to crutches, calipers, wheel-chairs and surgical instruments of various shapes and sizes. Union leaders lamented that IDPL had backtracked on its commitment to infuse funds, three years after the unit was
converted into a subsidiary following a direction from the Board of Industrial and Financial Reconstruction (BIFR) in April 1, 1994. On the other hand, they claim, that the workforce had already fulfilled all BIFR conditions and obligations imposed on them, including reduction in the workforce. They also agreed to revised working norms and enhanced responsibilities in every category, apart from job enlargement under multi-disciplinary system, including re-deployment of workforce with suitable training. In addition, the workers also accepted the deferment of wage revision and discontinuance of perks. IDPL (Tamil Nadu) Ltd recently submitted a detailed revival plan with the main objective to wipe out losses within four years and to generate cash surpluses to make it self-supporting. The plan said the accumulated losses of the Chennai unit for 1996-97 was expected to be around Rs 2.06 crore. The revival scheme also lists low capacity utilisation for surgical instruments, constraints in the growth of
formulation sales/surgical instruments and rising employment cost as the main drawbacks for the unit. Besides seeking quality certification for the products, the union leaders of IDPL (Tamil Nadu) Ltd were keen on support from the TN government in form of price preference for their products. When contacted by The Financial Express, top officials of IDPL said: "Though the unit has been converted into a subsidiary, a part of its fixed expenses continue to be borne by IDPL and the much-needed working capital funds have to be diverted to this unit for meeting its minimum need-based expenses. The TN government had been approached and persuaded at all levels to participate in a small equity base proposed for this unit, but it has not come forward." "In case of a revival, the funds have to be provided by the centre, separately, to these units. Currently, IDPL being a sick unit cannot provide budgetary support to these units for operational purposes. The cabinet is presently deliberating over the IDPL
rehabilitation package. Meanwhile, the centre is committed to pay the salaries of IDPL workers, including those at the Chennai plant. It is, however, a different matter that it is not fulfilling its obligations, and at the present juncture the salaries for October and November have not been paid," they said.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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