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Divestment of CMC and HTL fuels hope for privatisation process

The trouble-free sale of two government-run companies to private buyers is fuelling hope the country's vital but long-stalled privatisation process may finally be in gear.

The government sold a 51 per cent stake in computer software and maintenance company CMC Ltd to Tata Sons Ltd for Rs 1.52 billion, and 74 per cent of Hindustan Teleprinters Ltd to Himachal Futuristic Communications Ltd for Rs 550 million.

The amount raised is just Rs 2.07 billion, less than two per cent of the government's divestment target of Rs 120 billion for the year.

For almost a decade the government -- cash-starved, heavily indebted, yet facing a need to spend more to improve the nation's rickety infrastructure -- has trumpeted plans of raising huge sums by selling off state-owned enterprises.

But few deals have actually been completed.

An attempt to sell 40 per cent of national flag-carrier Air-India ground to halt in August when Singapore Airlines pulled out of the only qualified bidding consortium.

New Delhi did sell a controlling stake in state-run metal refiner Bharat Aluminium Co. But it immediately triggered a two-month strike by the company's 7,000 workers, and accusations the buyer, Sterlite Industries, paid too little.

The following is a list of 11 other companies which the government plans to sell by next March 31, the end of the current fiscal year, and the timetable:

Hindustan Zinc Ltd, India's largest zinc and lead producer. New Delhi intends to sell 26 per cent of its 75.92 per cent stake by the first week of November.

Companies interested in buying the stake include two big international metals companies -- Phelps Dodge and Swiss-based Glencore.

By late October the government is expected to seek bids for a 33.58 per cent stake in petroleum products retailer IBP Ltd, which operates 1,514 petrol stations.

As the Indian oil market will be liberalised next April, analysts expect strong bidding from foreign oil majors interested in a ready-made retail network, and from Indian refiners without any retail outlets.

Bidders are expected to include Australia's BHP, Shell and Malaysian state oil company Petronas, and domestic oil majors Reliance Industries Ltd, Essar Oil Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corporation Ltd.

In November the government hopes to complete the sales of two state-run hotel operators -- Indian Tourism Development Corp, which operates a chain of eight hotels, and Hotel Corporation of India, a wholly owned subsidiary of Air-India.

Stakes in Indian international phone monopoly Videsh Sanchar Nigam Ltd and in Maruti Udyog Ltd, India's dominant carmaker with almost a 60 per cent market share, are to be sold by end February.

In VSNL, the government will sell 26.97 per cent of its current 59.97 per cent holding; in Maruti the government is selling its portion of a rights issue to financial institutions.

Interest in VSNL has waned as the April 1 deadline approaches for ending its monopoly on providing international telecom services. VSNL, also India's largest Internet service provider, gets 90 per cent of its revenue from international telecom service.

In Maruti's case, the government and its 50-50 joint venture partner, Suzuki Motor Corp, are in the process of appointing three valuers who are expected to finish their work by December. The stake sale is expected to be completed by March.

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