The Hindu Business Line : With Hind Antibiotics `safe,' KAPL sees a ray of hope

The cloud of uncertainty hanging over Karnataka Antibiotics & Pharmaceuticals Ltd (KAPL) has lifted with the Finance Minister's word that the parent, Hind Antibiotics, would be revived with financial support, according to officials connected with the company.

KAPL is the joint venture of Hindustan Antibiotics and the Karnataka government-owned KSIIDC. Until recently, theirs was the curious case of a sick parent that was on the sell-off block and its healthy subsidiary not knowing which way the dice would roll for itself.

With a sales turnover of nearly Rs 80 crore and gross profit of Rs 4.3 crore for 2003-04, KAPL is today perhaps the only profit-making pharma PSU.

Last year, the Disinvestment Commission recommended 100 per cent Central divestment in KAPL even as the Board for Industrial and Financial Reconstruction was considering Sun Pharma's proposal to take over the sick Hind Antibiotics. That was when KAPL's State promoter, Karnataka State Industrial Investment & Development Corporation, also threw its hat into the ring. It wrote to the Ministry of Chemicals & Fertilisers renewing its intent to acquire KAPL fully or at least increase its holding to a controlling limit of 51 per cent.

Now that both the public sector entities are "out of danger," the situation may not warrant this any more, a senior official in the Industry & Commerce Department, under which KSIIDC operates, said. "KAPL was a sitting duck until now. There is no urgency now for new discussions on the issue. Probably the State government's letter also helped to seal the (Hind Antibiotics) case. As of now, the status quo (in the shareholding pattern) over KAPL may continue," he said.

KSIIDC holds 40.8 per cent shares in KAPL. Under the original agreement between the promoters, KSIIDC is to have the first option in case of any change of ownership.

KAPL was set up largely to manufacture and supply antibiotics and essential drugs to the State government's hospital requirements. Its long-serving MD, Mr M.V. Pathak, recently told Business Line that the company declared 25 per cent dividend for the second year in a row. Two years ago, it began upgrading its liquid injectables plant with an eye on the European market. "We also have two new products for this year" besides two line extensions, he said.

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