Financial Daily from THE HINDU group of publications
Saturday, Feb 16, 2002
Corporate - Mergers & Acquisitions
Industry & Economy - Disinvestment
Titagarh, Ruia Coatex bid for Jessop
NEW DELHI, Feb. 15
TITAGARH Industries Ltd and Ruia Coatex have submitted price bids for acquiring 72 per cent of the Government's stake in Jessop & Company Ltd, a subsidiary of Bharat Bhari Udyog Nigam Ltd .
"The price bids, submitted by the two bidders, would be opened on Saturday and evaluated by the Government before the results are announced,'' Government sources said.
Two other bidders who had evinced interest in acquiring the Kolkata-based loss making company dropped out of the race without submitting the price bids.
Jessop & Co is the first PSU in the heavy engineering sector to be privatised by the Union Government.
"The deal for Jessop & Co would be subject to approval from the BIFR, where the company was referred on turning sick,'' the sources said.
The J.P. Choudhary-promoted Titagarah Industries Ltd is a rival wagon manufacturer.
In order to sweeten the deal, the Government had decided to extend purchase price preference to Jessop & Co for two years after privatisation.
The purchase price preference will be in the form of orders for building 36 EMU coaches per annum for Indian Railways and a wagon order reservation of 8 per cent per year out of the PSU quota. The purchase price preference will be subject to the company matching the price of the lowest bidder in the open tendering process.
The Cabinet Committee on Disinvestment (CCD) had last month cleared a financial restructuring package for Jessop & Co, which involved writing off or waiver of Government loans and interest and infusion of fresh funds with the aim of cleaning up the balance sheet of the company before sale.
However, the financial restructuring package costing over Rs 200 crore to the Government will be implemented only upon successful privatisation of the company.
Jessop & Co is listed on the Calcutta Stock Exchange. Private individuals hold about 2 per cent of the company's stock.
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