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Sell-off panel recommends 4 new cases

Gaurav Raghuvanshi in New Delhi

The Divestment Commission has recommended strategic sale of Dredging Corporation of India, Telecom Consultants of India Ltd and National Projects and Construction Company, apart from the merger of Semiconductor Complex Ltd with another public sector corporation.

In its latest recommendations to the government, the commission said owing to the strategic nature of Semiconductor Complex, which was engaged in designing and manufacturing integrated circuits, the company could be merged with Bharat Electronics, which was engaged in similar activities.

A parliamentary committee had recently recommended further investment through Budgetary support for technology upgradation in loss-making Semiconductor Complex despite an overall government policy against such investments. The Chandigarh-based company had reported a loss of Rs 11.35 crore (Rs 113 million) in 2000-01.

The commission, headed by R H Patil, has suggested off-loading 51 per cent equity in profit-making Dredging Corporation and Telecom Consultants to strategic partners. The commission has also recommended that the surplus cash reserves with the two companies be drawn out.

Visakhapatnam-based Dredging Corporation had declared a net profit of Rs 109 crore (Rs 1.09 billion) for 2000-01 on a turnover of Rs 434 crore (Rs 4.34 billion). Telecom Consultants had reported a Rs 15.6 crore (rs 156 million) net profit on a turnover of Rs 776 crore (Rs 7.76 billion) in the same year.

In the case of National Projects and Construction, the commission has recommended that the government sells its entire equity to a strategic partner. Ahead of divestment, the commission has suggested that the government undertake a financial restructuring of the company that incurred a loss of Rs 58 crore (Rs 580 million) on a turnover of Rs 147 crore (Rs 1.47 billion) in 2000-01.

Fresh PMO move to break oil PSU logjam

The divestment ministry continues to favour strategic sale in both Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd even as the Prime Minister's Office is making fresh efforts to resolve the deadlock caused due to the petroleum ministry's insistence on initial public offering in the downstream marketing companies.

A government source said today the Prime Minister's Office was expected to convene a meeting of Petroleum Minister Ram Naik, Defence Minister George Fernandes and Disinvestment Minister Arun Shourie soon, to resolve the imbroglio.

A compromise formula doing the rounds involves strategic sale of Hindustan Petroleum and an initial public offering in Bharat Petroleum. The plan reportedly even has the concurrence of Naik.

A senior divestment ministry official, however, said: "We can never justify selling one company at seven times the price of a similar company. We have seen that the government's price-earning ratios were many times more when the strategic sale route was adopted."

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