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March 2, 2001                                       Feedback  

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DoD expects to complete sell-off of 15 firms by June

Mamata Singh

The department of divestment (DoD) expects to complete the divestment process in at least 15 companies before the end of June 2001. The finance minister had announced in the Budget that the government expects to divest its stake in 27 companies and get Rs 120 billion from the sale.

Among the targeted companies are Hindustan Zinc Limited, Hindustan Teleprinters Limited, National Fertilisers Limited and Madras Fertilisers Limited. The tentative date for completion of the sale process in these public sector units has been fixed as April 30, 2001.

The sale of government equity in Bharat Aluminium Company (Balco) was anyway expected to be finalised in the current fiscal itself. The government expected to receive final bids by February 22 and the bids were opened on February 23.

The sale agreement was expected to be signed on February 26. However, it has been put off pending discussion in Parliament.

DoD had indicated March 15 as the date for execution of legal documents and inflow of funds.

In case of big-ticket aviation companies Air-India and Indian Airlines the divestment is slated to be finalised by the end of June 2001.

Interestingly, the government has provided for almost a month's time between the receipt of final bids, bid evaluation and signing of the sale agreement.

The interim period would be used to get approval for the sale from the cabinet and regulatory authorities including the Securities Exchange Board of India (Sebi), officials said.

Also, the DoD has provided for a margin in case any unexpected issues crop up.

However, the divestment department has definitely managed to shorten the time required to complete the process of divestment considerably.

In contrast to Balco, where the government took over two years to complete the sale process, in case of telecom companies, CMC Ltd and Videsh Sanchar Nigam Limited, the DoD expects to finalise the sale within six months.

While it got the approval to proceed with divestment in both these companies in February this year, the sale process is expected to be finalised by the middle of June 2001. Here too, the DoD has kept a one-month margin between receipt of bids and signing of sale agreements.

Despite the furore created in Parliament over the sale of 51 per cent government equity in Balco to Sterlite Industries Limited, DoD officials are confident that the privatisation process will not be affected. "We will go full steam ahead," they said.

With the support of the prime minister's office (PMO) and of the finance ministry, the DoD does not anticipate any serious problems.

"Within the cabinet, there is a recognition of the need to go ahead with the sell-off process," said officials.

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