Search the Internet          Tips  Sites: Finance, Investment

No stripping of reserves before divestment

BS Economy Bureau

The VSNL controversy notwithstanding, the government has no plans to completely strip the reserves of companies in the divestment list.

Top-level government officials have told the divestment department that there was no way the government could insist on stripping reserves "beyond a point" as that would hurt the working capital requirements of the companies put up for a strategic sale later. They said the department of telecommunications had a "perception problem" in the VSNL case and added that the controversy should have been avoided.

The stance assumes importance as the government has at least two other big ticket divestment deals lined up for the current fiscal including that of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd. Shipping Corporation of India also has reserves of over Rs 5 billion.

In the Tata-VSNL controversy, Union communications minister Pramod Mahajan had argued that the investment decision of VSNL in Tata Teleservices was not in the spirit of disinvestment and had asked for its reversal. But the officials said the valuation of VSNL had factored in the sum of Rs 12 billion. Hence, there was little reason for the government to step in.

Powered by

ALSO READ:
The Divestment Development
The Rediff Budget Special
The Rediff-Business Standard Special
Money