The Hindu : Paradeep Phosphates sale cleared

Online edition of India's National Newspaper
Friday, Feb 15, 2002

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Paradeep Phosphates sale cleared
By Our Special Correspondent

NEW DELHI, FEB. 14. The Cabinet Committee on Disinvestment (CCD) today cleared the sale of 74 per cent Government equity stake in the loss-making public sector enterprise, Paradeep Phosphates Limited (PPL), to Zuari Maroc Phosphates Private Limited. The successful bidder is a joint venture of Zuari Agro Chemicals and Maroc Phosphore of Morocco.

The Disinvestment Minister, Arun Shourie, told newspersons that PPL had eroded its net worth completely owing to a monthly loss of Rs. 10 crores to Rs. 12 crores. It had a negative net worth Rs. 100 crores apart from an accumulated debt of Rs. 1,140 crores.

The other serious bidder for the company was Tata Chemicals. It, however, did not submit a financial bid finally. Rashtriya Chemicals and Fertilisers also evinced interest and completed its due diligence but did not participate in the bid submission. Zuari Maroc's bid of Rs. 151.07 crores was higher than the reserve price of about Rs. 83 crores estimated according to the discounted cash flow method.

Referring to concern by PPL trade unions and hunger strikes launched by workers, Mr. Shourie said Zuari had given an assurance that it would revise wages within 30 days of taking over. In addition, discussions on payments of arrears would be initiated immediately while the modalities of payment would be initimated within 90 days. Mr. Shourie said the employees' representatives had met him in connection with the need to revise wages retrospectively from 1997 while the Orissa Chief Minister, Naveen Patnaik, had also stressed this issue. With Zuari having already given the commitment on wages revisions, this would add to the company's burden by another Rs. 16 crores to Rs. 17 crores, the Minister said.

The Government, however, could not have acceded to this demand owing to the company's huge losses as well as the fact that it has undergone three restructuring programmes. The amount involved in the revival schemes are esimated at over Rs. 750 crores, he said.

Mr. Shourie pointed out that as much as Rs. 856.34 crores of the company's debt was to rock phosphate suppliers in Morocco and Tunisia as well as to the MMTC.

Non-payment to the Moroccan and Tunisian companies had affected friendly ties with these two countries and the External Affairs Ministry had written to the Disinvestment Department on this issue. The MMTC's outstandings were under dispute. This aspect had been mentioned in the shareholders' agreement.

He said PPL is also involved in litigation since 1995 and the Orissa High Court had actually directed closure of the plant today pending a review of anti-pollution measures by the State Pollution Board.

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