Thursday, Feb 28, 2002
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By Our Special Correspondent
Disclosing this here today, the Disinvestment Minister, Arun Shourie, said the Cabinet Committee on Disinvestment (CCD) has decided not to revise its earlier decision barring the Indian Oil Corporation from bidding for shareholding in the Hindustan Petroleum Corporation (HPCL) and the Bharat Petroleum Corporation (BPCL). This did not preclude other oil majors like the Oil and Natural Gas Corporation (ONGC) from bidding for these companies, he said. Briefing newspersons after a meeting of the CCD, he said the Government's balance equity in MFIL is being sold to HLL for Rs. 44 crores. Earlier, 74 per cent equity had been sold to HLL in January 2000 and management control had been handed over to the company. Given the nature of the sector in which MFIL operates, the CCD felt there was no justification for government shareholding in the company. In fact, government presence might constrict HLL to infuse funds liberally through various routes to meet capital requirements of MFIL. On the sale of Jessop and Co, Mr. Shourie said this was the first engineering company to be privatised. The CCD approved a bid of Rs. 18.18 crores of Ruia Cotex for 72 per cent stake in the ailing company which is now under the purview of the Board for Industrial and Financial Reconstruction (BIFR). The proposal for sale of government's shareholding as well as a revival proposal will now be submitted to the BIFR for a final decision as the company's fate has to be decided by this institution rather than the CCD. According to the Disinvestment Secretary, Pradip Baijal, the only two options before the BIFR were to accept the proposal for sale of equity along with the revival plan or to close the company which has 1,500 employees on its rolls. Since the company failed to revive after two restructuring schemes, it was referred to the BIFR which tried to change the management but did not get any response. Subsequently, BIFR referred the sick PSE to the Department of Disinvestment. The package proposed for the company of which the net worth is now negative at Rs. 290 crores includes non-funding support of Rs. 140 crores in the form of converting loans into equity and write off of penal interest along with financial support of Rs. 63 crores. In this context, he said this was an indication of future privatisation when the government might have to go in for negative bidding. In other words, literally paying bidders to take over companies which he maintained is a "realistic forecast". Regarding HZL, he said the CCD had approved transaction documents for offloading 26 per cent stake in the company to a strategic partner and financial bids would be called in the second half of next month. Besides, the employees stock purchase (ESPS) was approved for employees and whole time functional directors of HZL. The shares would be offered to employees at one-third of the listed market value or one third of the strategic sale price per share, whichever is lower, subject to the minimum of the share's par value, he said.
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