New Delhi, Feb. 14: The high-level core group on divestment will go ahead with all pre-sales activities for Asansol-based wagon maker Burn Standard despite the Supreme Court’s decision to halt divestment in all companies which were nationalised by an act of Parliament.
The core group, which comprises a group of secretaries headed by the cabinet secretary, is asking merchant bankers to the sale — UTI Bank — to prepare a shareholders’ memorandum for Burn Standard. Firming up the shareholders’ memorandum is considered to be the last step before putting any state-run company on the block.
“It is significant that the government has decided to go ahead with this move. It is a signal and there will be more such moves to complete the groundwork needed to put up more PSUs for sale that had been halted by the Supreme Court,” said officials.
The disinvestment ministry is sure of getting the apex court’s clearance within the next few months if not weeks and will start the selloff process with a vengeance once elections are over. Consequently, the unit wants to keep all work on this front ready.
Once the apex court decides to allow the government to go ahead with its privatisation programme, the disinvestment ministry has plans to put 24 firms on the block. Besides the two oil marketing giants, HPCL and BPCL, these include tea and engineering firm Balmer Lawrie and a clutch of ITDC hotels.
Scared of being sold off to what they feel might be a private entrepreneur interested in stripping the asset-rich company of its valuable real estate and other resources, Burn Standard officers and employees have, since last year, been pleading that the railway ministry take over the firm as it is the principal manufacturer of wagons for the Indian Railways.
However, instead of Burn Standard, the railways is considering a proposal to take over Mokameh and Muzaffarpur units of Bharat Wagon & Engineering Ltd as its captive units.
These two units fall in areas where Samata Party leader and railway minister Nitish Kumar hold sway.
Compared with Burn Standard, Bharat Wagons is in a poor shape. While Burn Standard has three units with machinery in good condition, Bharat wagons is in a ramshackled state.
Bharat Wagons has run up losses of Rs 30 crore in the last three years, while Burn Standard made a marginal loss of just Rs 24 lakh in 2002-03 and is expected to make a small profit in 2003-04.
Burn Standard, one of the largest wagon manufacturers in the country with an installed capacity of 8661 four-wheeler units and 1800 workers, has two major engineering units located at Howrah and Burnpur, besides refractory units located in West Bengal, Bihar, Madhya Pradesh and Tamil Nadu.
Besides, Burn Standard has an offshore platform fabrication yard at Jellingham in the Midnapore district.
It is backed by composite infrastructure to manufacture special wagons for transporting alumina powder, cement, fertiliser, milk (in stainless steel tank) and tank wagon for the transportation of liquefied petroleum gas. It also has a steel foundry to manufacture cast steel bogies and couplers for wagons.
Once the core group gives a go-ahead to the sale, the government will sell some 60 per cent stake in the Asansol-based Burn Standard which, in turn, is a 100 per cent subsidiary of Bharat Bhari Udyog Ltd, a holding PSU for several engineering firms.