Plunging from the dizzy heights of being a ₹1,000-crore turnover Mini Ratna company, employing over 3,000 persons and posting profits year after year, to the depths of tentative survival can only be termed a free fall of fictional dimensions. With its key lifeline cut and support systems almost withdrawn, HLL Lifecare Ltd here, under the Ministry of Health and Family Welfare, is gasping for breath.
For decades now, HLL Lifecare Ltd, earlier known as Hindustan Latex Ltd (HLL), was a premier industrial undertaking in the State. Established in 1967, the company was a key player in the nation’s family welfare campaign, supplying contraceptives, which were distributed across the country at subsidised rates. Over the past few decades, the company had diversified into newer areas, emerging as a leading manufacturer of a wide range of contraceptives, intra uterine devices, oral contraceptive pills and tubal rings, hospital and Ayurvedic preparations, and a range of women’s healthcare products.
Wide array of products
Its wide array of products included blood collection bags, surgical sutures, vaccines, in-vitro diagnostic test kits, hydrocephalus shunt, tissue expander, needle destroyer, blood bank equipment, iron and folic acid tablets, sanitary napkins and oral rehydration salts. Besides, the company also provided healthcare products at affordable rates through its network of retail pharmaceutical outlets, including AMRIT, HLL Pharmacy and Surgicals, HLL Opticals, Free Generic Pharmacy and generic drug stores.
With a strong infrastructure for direct marketing, the had company reached out to over half-a-million retail outlets, including over 1 lakh villages. The company’s products were being exported to over 70 countries with the company’s flagship condom branch, MOODS, reaching as many as 33 countries. The condom-manufacturing units at Peroorkada, Irapuram (in Ernakulam) and Kanagala (in Belgaum) have a combined installed capacity of 1,947 million pieces a year.
In 2003, the company’s turnover was a mere ₹163 crore. But it grew by leaps and bounds later, to cross the ₹1,000-crore mark during the 2014-15 fiscal, with profit after tax of ₹31.55 crore. And then began the downward spiral. Its profits slumped to ₹27.14 crore in 2015-16, before registering a loss of ₹25.38 crore in 2016-17. Around this time, the condom price ceiling, determined by the government through a competitive bidding process, began witnessing a drastic fall. While the price of 100 pieces for various brands was capped at ₹180–₹197 in 2013-14, the maximum rates fixed witnessed a marked fall in the subsequent years, to ₹168–₹184 in 2015-16, ₹143–₹162 in 2016-17, and ₹135–₹161 in 2017-18.
“Considering its huge capacity, which was mainly aimed at meeting government requirements, the massive fall in prices proved disastrous for the company. The mechanism to determine prices paved the way for the possibility of private lobbying, resulting in prices being under-quoted. Moreover, it was in 2015-16 that the government decided to scrap the squeeze model of packing, even while square packing, a practice followed for export-quality condoms, led to greater production costs,” said a former employee of the company, who has been following its vicissitudes with growing anxiety.
And then came the real blow. The Centre set in motion steps for 100% disinvestment in the company. The move followed a recommendation by the NITI Aayog for the sale of 100% of the government’s equity in the company through a two-stage auction process. The government also in-principle decided that the company’s subsidiaries HLL Biotech Ltd. and HLL Medipark Ltd. be hived off as separate special purpose vehicles (SPVs) and retained in the public sector. Sounding the death knell for the company, the Union government also veered away from its practice of placing anticipated order for the manufacture of condoms.
As is the usual practice, the government was expected to place its order for the new fiscal in March to ensure the continuous operation of the machinery. However, with the order being stalled, almost all of the machines at the factory have stopped working. All these years, the government had been procuring 75% of its annual condom requirement under its social marketing programmes or 75% of the installed capacity of HLL Lifecare, whichever was lower, from the company.
“With the government stalling the order, the factory’s operation was headed for an abrupt halt with all of the 13 machines, barring one, being turned off. As a result, the daily production of condom at the factory has fallen from 3.8 million pieces to 4,00,000 pieces. The operation is likely to be discontinued within a week if the government’s order is not received by then. Panic has set in among many employees, while most of the contract workers, numbering around 1,000, have already been disengaged,” a reliable source said.
In spite of such ominous signs, a section of the workforce are still hopeful that the company will soon function in full swing as it used to until a month ago. “Such rumours are floated every now and then. We’re confident that the company will receive its usual quota of orders from the Centre,” says G.S. Jayakumar, an employee of HLL Lifecare Ltd, who has completed 30 years at its Peroorkada factory. However, critics of the Centre’s privatisation bid claim that the well-established entity is being set on the path of self-destruction by certain policy decisions.
“There are reasons to suspect that the BJP-led Union government is setting the stage for the decline of the company to sell it at a later stage for peanuts. The denial of orders could be part of a pre-planned script. Parallels could be drawn between the government’s ploy and the privatisation of the Ashok Beach Resort that the India Tourism Development Corporation (ITDC) used to own in Kovalam,” A. Sampath, MP, who is also leader of the major employees’ unions at HLL Lifecare Limited, told The Hindu . Although several memorandums had been submitted to Prime Minister Narendra Modi and Union Ministers seeking shelving of the disinvestment process, there was no response so far, he added.
State’s loss
Kerala was the natural choice for establishing HLL’s original avatar, Hindustan Latex Ltd, as there is an abundance of natural rubber with latex, the main raw material for the production of condoms. Importantly, in a State that is often termed industry-unfriendly, HLL Lifecare Ltd could prove itself to be a major exception, recording rapid progress during the last five decades.
During this period, the company could diversify its products and launch seven subsidiaries in various parts of the country. In the process, the company also contributed immensely towards the growth of the local economy and several small-scale businesses have been built up around it. If the Centre’s disinvestment plans move forward, it would hit not just the employees, but several thousands who are indirectly dependent on HLL Lifecare Ltd.
“Sadly, a company which has contributed so much to the country is no longer anyone’s concern. There has also been a lack of initiative among trade unions to bring the issue to public conscience.
“Despite our State having people’s representatives of all major parties, none could convince the Centre to withdraw from its move to privatise the company. Besides its revenue and workforce, there is a rich legacy associated with HLL Lifecare,” said an employee.
