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Several bidders drop out of sell-off race

Mamata Singh

A large number of bidders have already dropped out of the race for privatisation of public sector units citing a number of factors, the main ones being inordinate delays and lack of clarity about the process.

Other reasons cited by bidders are disagreements with specific provisions in the divestment process and imposition of qualifying criteria for bidders.

Officials, however, are of the opinion that the large number of withdrawals could also be because some bidders put in non-serious bids in the initial stages and then pull out at subsequent stages.

"We did not follow a policy of asking for a deposit by bidders as it would discourage them. However, it has also encouraged non serious bidders to submit expressions of interest and then not follow them up," they say.

On delays, however, the government is now taking some action. With the new timetable, "if an official puts up a file which is not cleared by a minister, it will be easy to pin-point who is responsible," say DoD officials.

The idea behind assigning responsibility for each stage was to ensure that no one could blame it on someone else and delay the process indefinitely. "It is a very polite way of pressurising the various ministries and ministers to ensure that the work is completed," they add.

Other than the Air-India case which is the most widely quoted, a number of bidders have dropped out of the sale of other companies also.

In case of CMC, the government received 14 expressions of interest to start with, but got just one financial bid. In case of HTL also, the number of interested parties is down to two from the original six.

Gobal IT major Hewlett Packard had earlier withdrawn its bid for CMC Ltd citing "limited synergies" as the reason for the pull-out. Sai Info had withdrawn from the deal stating that the direction of divestment was not clear.

BPL has announced that it is reviewing its plans for VSNL in keeping with 'recent developments' in the telecom business. The Bharati-Singapore Telecom combine pulled out citing limited fund availability.

The Birla group and Videocon have also withdrawn from VSNL. The Tatas have also announced that they would prefer the government's telecom policy to be announced before they place a bid.

Ashok Leyland has withdrawn from bidding for IBP and Jessop stating that the attitude and approach of the government was to somehow disqualify them and that they were withdrawing on their own account.

In Hindustan Zinc, Allied Deals pulled out, stating that certain clauses in the shareholders' agreement were incompatible with standard international practice. The LN Mittal and Jindal groups had already stated that they were not interested in continuing.

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