The Hindu : CGD clears Maruti IPO

Online edition of India's National Newspaper
Thursday, Dec 12, 2002

Business

Business

CGD clears Maruti IPO

By Sushma Ramachandran

NEW DELHI DEC. 11. The core group of secretaries on disinvestment (CGD) today set in motion the process of going ahead with an initial public offer (IPO) for privatisation of Maruti Udyog Limited (MUL) even as it shied away from considering either Hindustan Petroleum Corporation Limited (HPCL) or Bharat Petroleum Corporation Limited (BPCL) till the Attorney-General's views are known.

Official sources said neither HPCL or BPCL disinvestment was on the meeting's agenda but it was widely expected that the committee would discuss some key aspects relating to these companies. The committee apparently preferred to wait till the Attorney General gives his views on the validity of disinvestment in relation to the past nationalisation of these companies.

Similarly, it has dropped the disinvestment of Shipping Corporation of India (SCI) from the agenda though this had even been taken up earlier at the level of the CCD. Sources indicated that SCI is no longer being posed for strategic sale in view of objections raised by the administrative ministry.

The CGD did, however, decide on strategic sale of Engineers India Limited, a consultancy company coming under the Petroleum Ministry. It also cleared the proposal to allow public sector companies such as Oil and National Gas Corporation and BHEL to bid for EIL. This was apparently because the proposals had been submitted prior to the September 7 decision to allow public sector companies for bidding only after separate clearance by the CCD. These decisions will now be submitted to the CCD for final approval.

In the case of MUL, the committee has decided to appoint J.P. Morgan and HSBC as the book runners for the IPO, the first phase of which is slated to be completed by March 31 next year. Sources said the Balmer Lawrie case will be submitted to the CCD for a final decision as there are differences between the Petroleum and Disinvestment Ministries on the modalities of the sale.

In regard to the strategic sale of HPCL, the Petroleum Minister, Ram Naik, was also cautious today as he stressed that the proposals from the public sector companies under his charge are awaited before a formal view is taken. The Ministry would then forward them to the Cabinet Committee on Disinvestment (CCD) for a final decision. He told newspersons that all companies interested in bidding for HPCL would have to submit proposals to the administrative ministry and give information on the reasons for this proposal. The Ministry would then take a view and forward the cases to the CCD.

Mr. Naik did not indicate what stand his Ministry would take on requests from ONGC and Gas Authority of India Limited (GAIL) which have already indicated their interest in HPCL. He also stressed that the decision on the two companies was unanimous and the Government would implement the compromise formula entailing sale of HPCL to a strategic buyer and offering government shareholding in a public offer in the case of BPCL.

Meanwhile over 100 Supreme Court lawyers have submitted a petition to the Prime Minister, Atal Behari Vajpayee, condemning the privatisation of HPCL and BPCL on the grounds that it is constitutionally invalid. They have described it as a "clandestine sale'' under the pressure from international agencies and domestic corporates.

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