Friday, Jul 11, 2003
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By Our Special Correspondent
The extent of Government shareholding in these companies ranges from 26 per cent in CMC, IBP and VSNL to 33.95 per cent in IPCL and 49 per cent in Balco. The IPO route will be taken also for the Dredging Corporation of India (DCI) where 20 per cent Government equity will be sold to help the company's fleet renewal plans. Briefing newspersons on these decisions after a meeting of the Cabinet Committee on Disinvestment (CCD), the Disinvestment Minister, Arun Shourie, assured that the market would not be crowded as a result of opting for the initial public offer (IPO) route for these companies. He pointed out that the strategic partners who had the first right of refusal would have to be persuaded to give up the option that had been provided for them in the existing shareholders and share purchase agreements. These agreements would both have to be amended to enable the Government to go to the market. Expressing confidence that the strategic partners in most cases would be amenable to such a change, he pointed to Suzuki Motor Corporation which had been persuaded to agree for the public issue route for Government disinvestment. In case the partners agree, he said the modalities for the IPOs would be worked out later in consultation with a group of ministers comprising the Disinvestment Minister, the Finance Minister and the Minister representing the administrative Ministry. The strategic partners are the Tatas in the case of CMC and VSNL, Reliance Industries for IPCL, Indian Oil Corporation for IBP and Sterlite Industries for Balco. Among the five companies, only Balco is not yet a listed company but Mr. Shourie disclosed that there were reports that it was considering listing on the London Stock Exchange. On other issues taken up by the CCD, he said the transaction documents for disinvestment of three public sector enterprises had been approved including those of National Fertilisers Limited, Hindustan Organic Chemicals (HOC) and Hindustan Copper Limited (HCL). Financial bids would be sought shortly, he said. In the case of NFL, he said there would be a dividend payment of Rs. 300 crores by the company as against total reserves of Rs. 800 crores. The dividend has been kept at this level since some of the company's units had to switch to a more viable feedstock. In regard to the Mineral Exploration Corporation (MEC), the CCD decided to opt to 100 per cent disinvestment based on the recommendations of the Mines Ministry. Mr. Shourie said the effort would be to make the equity broad based by selling it to the public but the strategic partner could also be given the option raising its equity stake to 51 per cent and only later goes to the market. Part of the equity for the purpose could be given to them at a fair value prior to the IPO, he said.
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