The Telegraph
Since 1st March, 1999
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Rules to help employees bid for PSUs

New Delhi, April 14: The Cabinet Committee on Disinvestment (CCD), which is slated to meet tomorrow, will take up a set of guidelines that will allow PSU employees to bid for the corporations they work for.

The draft guidelines call for employees’ co-operatives being set up with at least 500 workers or 25 per cent of the worker strength. The co-operative should have a corpus of at least Rs 10 crore, though this could be relaxed if the PSU in question was small enough.

The government hopes that PSU workers’ unions and officers’ associations will be enthused to buy out state-run companies like Praga Tools and Bharat Brakes and Valves which it has not been able to flog in the open market.

While the scheme is yet to be finalised, government officials, through the Burn Standard management, had tried to pressure the Asansol-based company’s unions to form a similar co-operative to buy out control in the wagon maker.

The move is unlikely to cut much ice with firms which have been faring poorly as workers are apprehensive that back-pay and allowances that the government owes them may well be scratched off if they themselves become the management of the loss-laden firms.

However, disinvestment ministry officials said they may consider tailoring selloff suits in such a manner so as to make it attractive for employee bidders — by writing off past dues of the firms being sold, allowing back-pay owed to be set off against price.

Divestment in airlines

The CCD meeting will also take an in-principle decision to temporarily delete Air-India and Indian Airlines from the selloff list. This is being done as the finance ministry has insisted that without such a formal decision it would be unable to stand guarantee for the dollar and euro loans the two airlines plan to run up in buying new aircraft.

The meeting will also discuss plans to rope in more potential foreign buyers by relaxing the bidding norms for Shipping Corporation of India. The disinvestment ministry feels it needs to relax the norms which allow foreign firms to pick up just 25 per cent stake in SCI, out of the 51 per cent being put up for sale.

Only two firms are believed to be in the race for SCI and the government is likely to decide whether to proceed with the existing bidders or to invite bids afresh.

At present SCI has around 60 per cent share in India’s oil cargo — strategically, the most important cargo, and its volume is expected to go up in future. Going by some estimates, the government is expecting Rs 1,200-Rs 1,400 crore for the 51 per cent stake in SCI.

Post-divestment, the government holding in SCI would come down to 26 per cent from about 80.12 per cent now. In addition to the 51 per cent strategy sale, 3 per cent of the equity would be offered to employees, probably under a stock option scheme.

SCI has a complex organisational structure with all types of vessels, including tanker, bulk carrier, liner, offshore vessels and even passenger carriers. Some of its services are perennially loss-making but, being a public sector undertaking, it is forced to run them. At one stage, the government had almost decided to shelve its plan for the strategic sale of SCI equity. Instead, it was toying with the idea of a public float of part of the equity held by it in the company.

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