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Dredging Corp selloff may take IPO route

New Delhi, May 29: The core group of secretaries today recommended disinvestment in Dredging Corporation of India through an initial public offer and strategic sale in Mineral Exploration Corporation Ltd.

It also decided to defer the selloff in Jute Corporation of India and Cotton Corporation of India till the system of minimum support prices for jute and cotton is dismantled.

It also took one more step towards selling the governmentís stake in Bharat Petroleum Corporation Ltd by shortlisting a global advisor for the sale. Officials, however, were unwilling to disclose the name of the advisor.

The government, which is going slow on its controversial bid to sell off HPCL, is keen to at least complete sale of 35.2 per cent equity in BPCL through a combination of an Indian public offer as well as through issue of ADRs or GDR in the global market. The employees are being offered 5 per cent of the equity.

Once this phased sale of equity in the market is over, the government will retain a 26 per cent holding in BPCL. Despite the minority stake, it will remain in management control of the oil marketer.

BPCL stock has been gaining over the last few weeks on reports that the government was in the process of appointing a global advisor for divestment of its stake in the oil refining company. Another positive for the stock has been the decline in crude prices. Crude prices have fallen from $ 38 a barrel before the Gulf war to just over $ 26 a barrel.

As domestic refiners import 70 per cent of their crude requirement, rising crude prices affects margins and profitability of oil marketing and processing companies.

The core group decided to defer sale in Jute Corporation of India but agreed that divestment should be taken up eventually, after studying the disinvestment commissionís recommendations.

The commission has recommended retaining government ownership in the company for five years if the minimum support price operations for jute continued. Thereafter, it wants the government to sell 51 per cent of the equity to a strategic partner after undertaking organisational restructuring.

Once the minimum support prices operations are dismantled, the government should off load its entire equity of 100 per cent to a strategic partner, the commission felt. The commission has also given a third option to close down the company, which has accumulated losses worth over Rs 105 crore.

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