The Telegraph
Since 1st March, 1999
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Rump holding sale on course

New Delhi, Nov. 25: The government today said it will go ahead with plans to sell its remaining stocks in five firms that have already been privatised, despite a court order halting the sale of two oil refining and marketing companies.

“The residual stake sales will go on,” disinvestment minister Arun Shourie said on the sidelines of the India Economic Summit here today. The Supreme Court’s order to seek parliamentary approval for selling stakes in Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) had cast doubts on divestment.

The government is planning to divest 26 per cent each in software firm CMC Ltd, long-distance telephony firm Videsh Sanchar Nigam Ltd (VSNL) and oil retailer IBP & Co Ltd. It also intends to sell 33.95 per cent and 49 per cent stake in Indian Petrochemicals Corporation Ltd (IPCL) and the unlisted Bharat Aluminium Company Ltd (Balco), respectively.

Last year, the government had sold a 26 per cent stake in VSNL and 51 per cent in CMC to the Tatas, while state-run Indian Oil Ltd bought 33.58 per cent in IBP as part of the privatisation programme.

Sterlite Industries holds a majority stake in Balco, while Reliance Industries runs IPCL.

“We are examining legal options to kickstart the privatisation process stuck by appeals in the Supreme Court against the sales of Shipping Corporation of India, Hindustan Copper Ltd and railway carriage maker Burn Standard Ltd,” Shourie said.

The government has been struggling to get its privatisation drive back on track after a series of court cases derailed the process. Unions, rival political parties and even some members of the ruling coalition oppose the privatisation plans, accusing the government of selling the family silver.

The divestment of residual stakes would require an amendment in the shareholders’ agreement and the share purchase agreement, which the government had signed with the strategic private investors.

The government had also said it would offer the stocks to the strategic partners prior to public offering in case they want to raise their stake in the companies to 51 per cent.

The modalities and the form of the public offer or whether to opt for ADRs or GDRs would also be decided in consultation with the strategic partner.

The move to sell the remaining stakes in these firms will help the government to partly meet its target of raising Rs 13,200 crore in the current financial year through privatisation and contain the fiscal deficit to 5.3 per cent.

Earlier, the government had acknowledged that it would fall far short of the target because of the Supreme Court order.

Analysts said the move to divest the residual stakes reflects the government's resolve for privatisation has not weakened and would also drive up the market.

The minister's comments have sent stock prices of these five companies up by between 1.8 and 5.6 per cent, outpacing the 1.5 per cent gain on the sensex.

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