The Hindu Business Line : Employees to chip in and bid for MOIL

THE employees of Manganese Ore India Ltd (MOIL) are setting up a special purpose vehicle (SPV) to bid for acquiring a controlling stake of 51 per cent in the company.

This could be the first case of a genuine and serious attempt by the employees of a company to buy out the concern in which they are employed, Government sources said.

The Cabinet Committee on Disinvestment (CCD) on Thursday approved the sale of 51 per cent Government equity in MOIL in favour of a strategic partner along with transfer of management control as well as a stock option plan of 4.57 per cent to the employees. The Government would retain 26 per cent in MOIL, the Disinvestment Minister, Mr Arun Shourie, stated.

The Union Government currently holds 81.57 per cent stake in MOIL while the Governments of Maharashtra and Madhya Pradesh hold 9.62 per cent and 8.81 per cent stakes respectively.

"With a small paid-up capital base of Rs 15.33 crore and a net worth of Rs 102.13 crore, MOIL could be a good case for employee buyout," Disinvestment Ministry officials said."In the past when workers had proposed an employee buyout, we would have laughed it off as a joke," he said. "But, the proposal submitted by the employees of MOIL appears to be workable given the small equity and asset base of the company and high workforce of 7,500 employees. The company derives its revenues from the 10 manganese ore mines located in Maharashtra and Madhya Pradesh, with the current production level being 7,00,000 tonnes per annum," the officials said. Since the Government's shares will have to be bought by a legal entity, the employees have decided to set up an SPV to bid for the shares. They have also roped in Bank of India as a venture capitalist to fund the acquisition.

If every employee chipped in with about Rs 50,000, they could easily mobilise the funds to acquire the company, the official said. The employees' plan to buy out the company is spearheaded by the INTUC President, Mr Sanjeeva Reddy.

The workers are now willing to participate in the competitive bidding process for acquiring MOIL. "Earlier they had expressed a desire to acquire the company by paying Re 1 more than the reserve price fixed by the Government for the 51 per cent stake. The Disinvestment Ministry said that was not possible," the official said.

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Employees to chip in and bid for MOIL