Financial Daily from THE HINDU group of publications
Wednesday, Feb 06, 2002
Industry & Economy
Divestment panel for staff buyout in RITES, PEC
NEW DELHI, Feb. 5
THE Disinvestment Commission has recommended a management-employee deal for a 100-per cent buyout of Government holding in Projects and Equipment Corporation Ltd (PEC) while a similar deal for a minimum buyout of 51 per cent stake in Rail India Technical and Economic Services Ltd (RITES) has been suggested.
In its 13th report submitted to the Government recently, the commission has also said that the Government should consider selling 51 per cent of its equity in Neyveli Lignite Corporation Ltd (NLC) and Manganese Ore (India) Ltd (MOIL) to strategic partners.
The commission has argued that RITES should be privatised to transform it into an independent organisation that could stand up to the stiff competition in the international consultancy business.
It has said that the Government stake should be offered to employees, both past and present, since the assets of the company is mainly knowledge and expertise of its officers.
However, the commission has said that Government should retain at least 25 per cent of the equity in the company, while the remaining equity could be distributed among reputed infrastructure consultancy organisations and infrastructure leasing and finance organisations.
On PEC, the commission has said that no strategic interest of the Government would be served by letting the company remain in the public sector fold. It has said that if a 100 per cent sell-out of the company to employees is not possible, the Government should explore the option of offloading the equity to a reputed international trading organisation.
In the event there is no investor interest in the company it should be closed, the panel has said.
On NLC, the commission stated that the Government had said that the restructuring of the company should be left to the strategic buyer.
However, it has said that a cautious approach should be adopted to ensure that the entire disinvestment in the company is done at one go so as to give the regulatory authorities enough time to supervise private mining companies after the passage of the Coal Mines (Nationalisation) Amendment Bill, 2000.
Regarding MOIL, the commission has said that the disinvestment should be limited to 51 per cent in the first stage to allow Government involvement in the company till the regulatory authorities gear themselves up to preventing slaughter mining and adoption of optimal exploitation practices.
Further disinvestments, it has said, should be considered at a later stage.
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