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Tatas get VSNL, IOC bags IBP
By Our Special Correspondent
NEW DELHI, FEB. 5. The Government's privatisation efforts finally took shape in a big way with the Cabinet Committee on Disinvestment (CCD) today deciding on selling 25 per cent equity in the Videsh Sanchar Nigam Limited (VSNL) to a Tata Group company, Panatone, and a strategic sale of 33.58 per cent equity in the petroleum company, IBP Limited, to another public sector company, Indian Oil Corporation (IOC) Limited. Besides, four hotels of the Indian Tourism Development Corporation (ITDC) and the Hotel Corporation of India would be sold to four private bidders, the CCD today decided.
Briefing presspersons after the meeting, the Disinvestment Minister, Arun Shourie, announced that proposals for disinvestment in the public sector oil giants, Hindustan Petroleum and Bharat Petroleum, would be announced by June this year. But the IOC would not be allowed to bid for stakes in the two public-sector companies as the Government favoured public- private sector competition which would ultimately benefit the consumers as in the telecom sector, Mr. Shourie said.
The VSNL sale would fetch the Government Rs. 1,439 crores while the IBP sale would rake in another Rs. 1,153.68 crores. Also, the sale of Qutab Hotel and Lodhi Hotel in New Delhi would fetch Rs. 35.67 crores and Rs. 76.22 crores respectively, while the Laxmi Vilas Palace Hotel in Udaipur would get another Rs. 7.52 crores and the Centaur Hotel Airport in Mumbai Rs. 83 crores.
According to Mr. Shourie, in the case of IBP, IOC was chosen as the strategic partner over Royal Dutch Shell by the CCD which approved the top bid of Rs. 1,153.68 crores against the second bidder's offer of Rs. 595 crores.
As for VSNL, the Tatas beat Reliance by bidding for Rs. 1,439 crores against Reliance's bid of Rs. 1,346.62 crores. The Government had fixed a reserve price of Rs. 1,218.37 crores for VSNL and Rs. 337 crores for IBP and in the final analysis, IOC had bid Rs. 1,551 per share of the petroleum company while the Tatas had bid Rs. 202 per share of the telecom giant.
The two successful bidders, who would sign transaction documents with the Government in the next two days, would have to make an open offer for acquiring 20 per cent of floating shares of each corporation they acquired. Mr. Shourie admitted that the Government was not successful in getting a favourable response for 12 properties of the ITDC and Hotel Corporation of India that were on the block. These issues would be looked at afresh.
He said the Government would announce proposals for privatisation of HPCL and BPCL within three months of dismantling of the administered pricing mechanism for petroleum products which is expected on April 1 this year. He said strategic sale would be the preferred mode of disinvestment. However, he did not give the quantum of equity that would be divested in the two oil companies.
About the hotels, Mr. Shourie said the Centaur airport hotel in Mumbai would be sold to A.L. Batra of the Radisson Group of Delhi for Rs. 83 crores against the reserve price of Rs. 78 crores. The Singapore-based Silverlink Holdings successfully bid for Lodhi Hotel in New Delhi for Rs. 76.22 crores against a reserve price of Rs. 40.36 crores, while Sushil Gupta and Associates of Hyatt got Qutab Hotel for Rs. 35.67 crores against a reserve price of Rs. 31 crores. Laxmi Vilas Palace Hotel went to Bharat Hotels of the Lalit Suri Group for Rs. 7.52 crores against a reserve price of Rs. 6.12 crores.
Mr. Shourie said that besides the Tatas' bid of Rs. 1,439 crores for VSNL, the Government had also got Rs. 1,887 crores as special dividend and Rs. 363 crores as dividend tax, which took the total accrual from VSNL to Rs. 3,689 crores this year.
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