Financial Daily from THE HINDU group of publications
Wednesday, Nov 13, 2002
Industry & Economy
Several PSUs lined up for divestment panel meeting
NEW DELHI, Nov. 12
THE line-up for the November 14 meeting of the Core Group of Secretaries on Disinvestment (CGD) is impressive and gives an indication that it will be business as usual at the Disinvestment Ministry despite the drubbing from all and sundry.
Coming up for discussion are some old cases such as Shipping Corporation of India (SCI), Hindustan Organic Chemicals Ltd (HOCL), Instrumentation Control Valves Ltd (ICVL), State Trading Corporation Ltd (STC), Hindustan Cables Ltd (HCL), NEPA Ltd, National Instruments Ltd as well as fresh cases such as Cochin Shipyard Ltd (CSL), Hindustan Shipyard Ltd (HSL) and Central Inland Water Transport Corporation Ltd (CIWTC), Government sources said.
The CGD is expected to discuss and finalise the transaction documents for the privatisation of SCI, ICVL and HOCL (along with a debt restructuring plan).
Besides, the Secretaries panel will sort out the hurdles that have cropped up in the disinvestment of STC including the company's disputes with New Delhi Municipal Corporation (NDMC) on its Jawahar Bhawan headquarters and other Government agencies and departments over outstanding dues.
The case of HCL relates to lack of bidders to pursue the disinvestment process and to refer the company back to the Ministry of Heavy Industries and Public Enterprises for further action.
The only ripe case for privatisation is that of Madhya Pradesh-based newsprint maker NEPA Ltd in which the lone price bid submitted by Lok Prakashan Ltd (which runs the Gujarat Samachar group of publications) is above the reserve price set by the Government.
Among the fresh cases, the Disinvestment Ministry has proposed privatisation of loss-making HSL and CIWTC by selling the entire Government equity of 100 per cent in these entities through the strategic sale route as recommended by the Disinvestment Commission.
However, in the case of CSL, the Ministry has proposed a strategic sale of 51 per cent of the Government's equity in the marginally profit-making company.
But, the company to watch out for is National Instruments Ltd, referred to the Board of Industrial and Financial Reconstruction (BIFR) on becoming sick a few years ago.
The Disinvestment Ministry, with the approval of BIFR, wants to make an effort to locate a joint venture partner for National Instruments Ltd.
The global advisor for the task has been identified but before inviting expressions of interest from prospective bidders, the Ministry wanted to finalise the quantum of equity (ranging anywhere between 51 to 74 per cent) to be given to the private strategic partner.
That is when the Heavy Industries and Public Enterprises Minister, Mr Balasaheb Vikhe Patil, came into the picture. The Shiv Sena leader created a flutter in the Ministry by saying that the Government should first value the assets of the company and then decide the quantum of equity to be sold to the strategic investor.
The Disinvestment Ministry was aghast. "Asset valuation has nothing to do with fixing the quantum of equity being sold in a PSU,'' Ministry sources said. Asset valuation is usually carried out towards the end of the disinvestment process as one of the ways to determine the reserve price for the Government's stake being put up for sale.
The Disinvestment Ministry is of the view that identifying a strategic partner for NIL would be difficult in the absence of transfer of management control. "Nobody would invest their money to become a mere financial partner in NIL," the sources said.
The Ministry will submit before the CGD that it must be permitted to float expressions of interest after determining the quantum of stake to be sold in NIL along with management control.
"Otherwise, we will refer all the sick PSU cases which are lying with us for disinvestment back to the Ministry of Heavy Industries and Public Enterprises," the sources said.
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