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Delay in deciding fate of Rs 600 crore vaccine project could derail revival plans

The government is working on modalities of revival plan including a proposal to write-off debt to the tune of Rs 300 crore, before IVC is handed over to any strategic partner.

February 26, 2020 / 07:22 PM IST

The government’s delay in deciding the fate of the Rs 600 crore Integrated Vaccine Complex (IVC) located in Chengalpattu, Tamil Nadu, may become detrimental to its plan to revive the project and also the disinvestment of HLL Lifecare.

“The government has to take quick decisions to save the project, otherwise whatever little interest has been evinced by prospective partners who want to take over operations, would fade,” a person with knowledge of affairs at IVC told Moneycontrol on condition of anonymity.

The person quoted above said the equipment worth crores of rupees at IVC that’s idle without maintenance could possibly become unfit for production.

IVC is a sordid tale of a mega-project, involving hundreds of crore rupees of public money, becoming sick even before commencing operations.

HBL, which is implementing the project, has been struggling financially as it awaits the execution of proposed disinvestment of its parent firm HLL Lifecare. HLL Lifecare has stopped providing additional funds crippling the project. HBL has been struggling to pay salaries to staff, interest to lenders and clear vendor dues.

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The government is working on modalities of revival plan including a proposal to write-off debt to the tune of Rs 300 crore before IVC is handed over to any strategic partner.

Still, there is no clarity whether the government is looking for an outright sale of IVC or wants to retain a significant minority interest in HBL.

Another person who didn’t want to be identified said the dilemma in sealing the fate of IVC could possibly delay disinvestment of HLL Lifecare

The Thiruvananthapuram-based HLL Life Care, popularly known for condoms brands such as Nirodh and Moods, is itself going through the process of disinvestment, where the government wants to sell its entire stake in the PSU through an auction process.

HBL will be hived off as separate special purpose vehicle (SPV) from HLL before divestment, following which the government may bring in a strategic partner into HBL.

Bharat Biotech is said to have evinced interest. Sources said executives of Biocon’s contract research arm Syngene have visited the facility. But nothing has moved on the ground.

Moneycontrol early this month reported that the employees of IVC were given the option of joining the parent HLL Lifecare on a temporary basis in any of its units across India.

Notwithstanding the messy state of affairs at IVC, the assured offtake of 75 percent of production by the government for its Universal Immunization Programme is the only draw that could attract potential partners.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Feb 26, 2020 07:22 pm

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