On November 25, NCLT, in its final order, directed the Centre to hand over the entire stakes of HNL in HPCL to the Kerala government.

26 Nov 2019

File Photo.

As the Bharatiya Janata Party-led central government gives away the national assets—public sector undertakings (PSUs)—to multinational corporates, the Left Democratic Front (LDF) government in Kerala has been making efforts to retain the PSUs in the state. One of such efforts has turned out to be fruitful, as the National Company Law Tribunal (NCLT) has ordered handing over of the Velloor unit of Hindustan Newsprint Limited (HNL) to the Kerala government.

The LDF government’s offer to buy stakes of the company for Rs 25 crore had already been accepted by the representatives of the Hindustan Paper Corporation Limited (HPCL), the parent company of HNL, and the creditors. During the negotiation talks, representatives of PSU Restructuring and Internal Audit Board and HNL were also present. Then, the liquidator who had been appointed by the NCLT placed it before the New Delhi bench of the NCLT for the final orders.

On November 25, NCLT, in its final order, directed Centre to hand over the entire stakes of HNL in HPCL to Kerala Government. It has given 90 days to the state government to submit the money before the tribunal.

HNL, which is located at Velloor in Kottayam district of Kerala, employs as many as 364 regular employees and about 400 contract workers. Along with this, about 4,000 people depend indirectly on the unit.

HNL was incorporated as a wholly owned subsidiary of the HPCL in 1983. HPCL, which was established on May 29, 1970—for developing indigenous capacity in production of paper and newsprint with a view to reduce dependence on the imports—launched the Kerala Newsprint Project (KNP) in 1976. Later, on HNL took over KNP—with effect from October 1, 1983.

At the time of establishment of the company, the then government of Kerala had acquired 650 acres of land for the company. As the company helps the state develop and generates employment, the state has been providing subsidised raw material—pulp from the eucalyptus and the bamboo reed, along with water and power.

The Centre, however, had started the disinvestment processes long back and the Kerala government had been trying to take over HNL simultaneously. On October 24, 2016, Kerala Chief Minister Pinarayi Vijayan requested the Government of India to delink the company from its holding company. He also asked the government to make it an independent enterprise under the Department of Heavy Industries, but the proposal wasn’t given ascent at that point.

Even in March 2018, the company had invited expressions of interest for the proposed strategic disinvestment of 100% shareholdings of HNL. Following that, Kerala Newsprint Employees’ Union had approached the Kerala High Court in 2018. During the case period, Industries Department undersecretary of the state had stated that the decision to hand over the land is illegal. The state also made it clear that if the Centre is giving off the company to the private players, state has the right to step back from the contract on land and it is mentioned in the agreement.

As the government is legally entitled to take over the HNL unit in Velloor, the employees of HNL are hoping for the comeback of the company which had been performing well till 2011-12. However, hundreds of workers have not been paid for last 13 months.

Once the state government acquires the company, we have high hope about our salaries, said TB Mohanan, the working president of HNL Employees’ Union, while speaking to NewsClick.

On the other hand, the processes to hand over the Instrumentation Limited Palakkad (ILP) to Kerala government is being held up over the issues related to land assets. In June 2018, the state government had decided to take over the unit and on November 16, 2018, a tripartite memorandum of understanding (MoU) was signed by the Department of Heavy Industry (DHI), Government of Kerala, Department of Industry and the Instrumentation Limited defining the modalities of transfer of Palakkad unit to Kerala government, with the approval of the competent authority.

The Union Cabinet had, on November 30, 2016, approved the closure of the Kota unit of Instrumentation Limited and had accorded ‘in principle’ approval for the transfer of Palakkad unit of Instrumentation Limited to the Kerala government.

Though the MoU was signed, the unit has not been handed over to Kerala government yet. So, Elamaram Kareem, a parliamentarian from Kerala, raised the question why the Centre is delaying the handing over of ILP to the state on the floor of Rajya Sabha on November 25.

Replying to the queries of Kareem, Prakash Javadekar, the minister of heavy industries and public enterprises, said: “...the required assessment of Net Asset Value (NAV) of the Palakkad Unit was underway, it was learnt that the High Level Committee had not taken into consideration the value of land owned by the Palakkad Unit, measuring 566.30 acres which was assigned on registry to Instrumentation Limited, Kota for the establishment of Precision Instrumentation Project at Pudussery Kerala under the Rules of Assignment of Government Land for Industrial Purposes dated 30.03.1964, which has material bearing on the transfer modalities. The value of this land owned by Instrumentation Limited has not yet been assessed.”

The Centre is delaying the handing over of the unit over the value of the land, which was not the part of earlier MoU. Back in 1964, the unit was established at Kanjikkode in Palakkad. The land was acquired by the state government for industrial purposes and had handed it over for the ILP back then. Majority of land, which had been given to the ILP is not with them at present. They handed over the land to Railway, FCRI, Kendriya Vidyalaya etc. However, now, ILP possesses only 122 acres of land.