Financial Daily from THE HINDU group of publications
Tuesday, May 14, 2002
Industry & Economy - Disinvestment
Logistics - Shipping
Varun becomes Sterlite's `advisor' -- Finolex, two others drop out of SCI race
Mr Arun Mehta
NEW DELHI, May 13
THE Finolex group, French container line CMA-CGM and the Hong Kong-based Orient Overseas Container Line Ltd (OOCLL) have dropped out of the bidding process of Shipping Corporation of India (SCI).
However, Varun Shipping Company Ltd has started advising Sterlite Industries Ltd, which began its due diligence on Monday as one of the pre-qualified bidders, in a move that may eventually lead to a tie-up between the two companies.
"At the moment, Varun is advising Sterlite on the finer aspects related to shipping," Mr Arun Mehta, Vice-Chairman and Managing Director, Varun Shipping, told Business Line.
Mr Mehta emphasised that Sterlite was carrying out the due diligence in its capacity as the pre-qualified bidder and Varun's role was limited to that of "advisor."
The Finolex group had informed SBI Caps-Lazard India combine, the advisors to the SCI deal, last week that it was bowing out of the SCI bidding process for want of partners.
"Finolex was unable to strike a deal with a Norwegian and Greek company for undertaking a joint bid for SCI. So we withdrew our expression of interest," a top official with the Finolex group told Business Line.
Finolex was keen on inducting its joint venture partners before starting the due diligence. "Since this did not happen, we decided not to pursue the deal further as inducting our joint venture partners after the due diligence would have led to complications," the official said.
Officials tracking the SCI disinvestment exercise said that the French container line CMA-CGM and OOCLL of Hong Kong also decided to drop out without undertaking the due diligence.
Essar Shipping Ltd, Malaysian International Shipping Corporation Bhd, Great Eastern Shipping Company Ltd and the Aban Loyd-Qatar Shipping Company Ltd consortium have so far completed the due diligence, which started from April 29.
Sterlite Industries, the Iffco-Kribhco combine and BPL have also started their respective due diligence from Monday onwards which would stretch up to Saturday.
All these bidders are expected to carry out the financial due diligence of SCI from the week starting May 21 to scrutinise the accounts of the company for the year ended March 31, 2002.
The Union Government is in the process of selling 51 per cent of its stake in SCI to a strategic partner along with transfer of management control.
As per the decision taken by the Cabinet Committee on Disinvestment (CCD), a domestic bidder can bid for the entire 51 per cent stake being put up for sale in SCI whereas a foreign bidder can bid for a maximum of 25 per cent stake and for the remaining 26 per cent he would have to join hands with a domestic partner.
The Union Government is hoping to wrap up the SCI deal by the end of June.
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