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Govt invites IPCL bid price next week

The government will invite buyers to put a price on bids for a strategic stake in state-run petrochemicals firm IPCL next week, paving the way for wrapping up this fiscal year's first big privatisation.

"We'll invite the price bids in consultation with bidders and depending on the time they need, we hope to complete the process in 15-20 days time," Pradip Baijal, who holds the key post of divestment secretary at the privatisation ministry, told Reuters on Sunday.

The government, which owns a 59.75 per cent stake in IPCL, the country's No 2 petrochemicals maker, plans to sell a 26 per cent stake along with management control.

Three companies -- state-run refiner Indian Oil Corp, India's largest petrochemicals company Reliance Industries and detergent maker Nirma -- are in the race to win control of Indian Petrochemicals Company Ltd.

Last week, the government removed a major obstacle to IPCL's sale when the privatisation and oil ministries agreed on a new pricing formula for gas supplies to the company.

IPCL gets gas from another state-run company Oil and Natural Gas Corp at half the prevailing global price.

That agreement was critical to IPCL's privatisation since the pricing formula will be a key determinant of the price that potential bidders will be willing to pay for a stake.

MARUTI SALE

Baijal said the government also hoped to complete within a month the privatisation of Maruti, India's largest carmaker, in which it and Japan's Suzuki Motor Corp hold 50 per cent each.

He said the government and Suzuki had made "considerable progress" in resolving issues related to the privatisation, expected to be among the biggest this year.

"When you sit down to negotiate, nothing can be predetermined. I'm hoping to complete the sale within this month," he said.

The government is following a different gameplan in the privatisation of Maruti and has announced a two-step withdrawal from the company.

Under the first step, Maruti will make a rights issue of shares worth Rs 4 billion. Suzuki will subscribe both to its own part of the offer and to that of its partner, paying a control premium.

In the second stage, the government plans to sell its remaining minority stake in the company.

Fresh life was breathed into India's painfully slow privatisation programme in the fiscal year to March 2002, when the government managed to sell several firms, notably telecoms giant VSNL, Hindustan Zinc and computer hardware and maintenance firm CMC.

This year it has listed strategic sales of refiners Bharat Petroleum and Hindustan Petroleum, petrochemicals firm IPCL, Shipping Corporation of India, carmaker Maruti and National Aluminium Company as some of its big ticket sell-offs.

The government's success in selling stakes in firms has boosted sentiment in the stock market and shares of state-run companies have surged in recent weeks as analysts expect the privatisation drive to unlock value in these stocks.

India, which has repeatedly failed to meet its privatisation targets in the past, plans to raise Rs 120 billion ($2.46 billion).

Since 1991-92, the government has managed to raise just Rs 267.38 billion out of a targeted Rs 660 billion.

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