Financial Daily from THE HINDU group of publications
Thursday, Oct 07, 2004
Mergers & Acquisitions
Industry & Economy - Disinvestment
AS Steel Traders highest bidder for Orichem
Kolkata , Oct. 6
AS Steel Traders Ltd of Visakhapatnam has put in the highest financial bid of Rs 9.12 crore for purchase of Orichem Ltd, a closed subsidiary of Industrial Development Corporation of Orissa Ltd (IDCOL). The company has emerged as the highest bidder for Orichem among seven companies in the race.
Orichem has been put on the block for sale by the Department of Public Enterprises of Government of Orissa under its PSU disinvestment programme pertaining to all the closed down IDCOL subsidiaries.
The company used to produce chrome chemicals such as sodium dichromate, basic chrome sulphate and its by-product of yellow sodium sulphate.
All these products are said to be sought after by reputed companies such as Asian Paints, Goodlass Nerolac, Ballarpur Paper Mills, and many pharmaceutical companies and major tanneries operating in West Bengal and south India.
The company was incorporated in 1974 as a joint sector outfit by IDCOL and D.K. Jhunjhunwala as joint promoters.
The management of Orichem was transferred to IDCOL in 1989 by way of transfer of shares held by the private promoter.
The paid-up equity of Rs 2.7 crore is held mainly by IDCOL (Rs 2.29 crore), with IDBI holding Rs 11.28 lakh. The other stakeholders are ICICI, IFCI, LIC, GIC and the public.
According to Orissa Government sources, the technical and financial bids by some seven prospective investors were opened last week.
The bidders list included four Orissa-based companies, two Delhi-based ones and one headquartered in Andhra Pradesh.
The two Delhi companies were Global Minetec Ltd and Negolice India Ltd. Among the Orissa-based companies were Himani Ferro Alloys Ltd, Bhubaneswar, and Mahanadi Castings Pvt Ltd, Cuttack.
Sources said prior to the opening of the bids, Srei Capital Markets Ltd, a member of the Srei Group (appointed as advisors to the disinvestment programme), had fixed the reserve price at Rs 7.4 crore for sale consideration of the entire assets of the company, consisting of plant and machinery, equipment, land and buildings and other movable and immovable assets.
It is learnt that earlier, ICRA had revalued the assets of Orichem in March 1998 aggregating Rs 8.25 crore.
After the closure of the company in October 2000, all workmen have been retrenched and paid their closure compensation.
During operations, the company had 200 permanent and an equal number of casual workers, most of whom were local residents.
The company's plant is located at South Balanada in the industrial town of Talcher, district of Angul, in Central Orissa and is some 4 km from the Talcher railway station, and about 150 km from Bhubaneswar.
The area is industrially developed, surrounded by a busy coal-mining belt. Chrome ore, which is the key raw material for the production of sodium dichromate, is abundantly available in Orissa, which has over 95 per cent of the nation's deposits.
Sodium dichromate is sold mainly to the manufacturers of paints and pigments, saccharine, dyeing, pharma, paper industries and tanneries. Sources said basic chromium sulphate was mainly consumed by the leather sector.
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