Financial Daily from THE HINDU group of publications
Friday, Feb 15, 2002
Industry & Economy - Disinvestment
Corporate - Mergers & Acquisitions
Paradeep sold for Rs 151.7 cr
NEW DELHI, Feb. 14
THE combine comprising the K.K. Birla-promoted Zuari Chemicals and Fertilisers Ltd and Maroc Phosphore of Morocco has bagged the deal for acquiring strategic control of Paradeep Phosphates Ltd (PPL) for a consideration of Rs 151.7 crore, in a unique case of disinvestment wherein two reserve prices were fixed for the Government's 74 per cent stake.
While the Government set a reserve price of Rs 83 crore based on the discounted cash flow method, the global advisors appointed by it arrived at a reserve price of Rs 176 crore, which factored in the replacement cost of plant including certain physical assets of PPL.
"The bid submitted by the Zuari combine was substantially higher than the reserve price set by the Government, and the same was cleared by the Cabinet Committee on Disinvestment (CCD) at a meeting on Thursday," the Union Minister of Disinvestment, Mr Arun Shourie, said.
Zuari holds 51 per cent stake in the joint venture with Maroc Phosphore.
The CCD accepted the recommendations made by the evaluation committee, the inter-Ministerial group and the core group of Secretaries on Disinvestment on the bid.
Even if the reserve price set by the global advisors had been the yardstick, the price quoted by the lone bidder would have fallen short only by Rs 7-8 crore after taking into account an extra outgo of Rs 16-17 crore on account of revision in wages and salaries of the workers.
The bidder had assured the Government through a letter that it would revise the wages and salaries of the workers within 30 days of becoming strategic partners.
The Zuari-Maroc Phosphore combine had also said that it would start a dialogue with the unions on the payment of wage arrears with effect from 1999, the modalities for which would be finalised within 90 days of taking control of the company.
"The CCD deliberated on this issue and it was felt that a re-bid would have entailed another 3-4 months, besides costing an additional Rs 40 crore for the Government due to losses incurred by PPL at the rate of Rs 10-12 crore per month,'' Mr Shourie said.
The CCD also took into consideration the replacement cost of the company if it were to be closed down and the loss of jobs in such an event before approving the bid.
PPL has about 1,150 regular employees and approximately 1,600 contract workers on its rolls.
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