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Way cleared for privatisation of MUL, PPL and Jessops

The government will complete the first phase of a planned sell-off of India's largest carmaker, Maruti Udyog Ltd, by the end of March.

Divestment Minister Arun Shourie told reporters after a meeting of the privatisation committee that the valuation of Maruti had been completed.

He said the government would soon be writing to Suzuki to negotiate the rights issue and the control premium that would be paid by Suzuki, which holds 50 per cent of the carmaker.

"The first phase of the privatisation will be completed by the end of March. The complete sale will probably happen sometime next year (2002-03 April-March)," Pradip Baijal, privatisation secretary said.

The government had earlier mandated KPMG, Ernst and Young along with S B Billimoria to act as valuers for MUL.

CCD had last year cleared a proposal for diluting government's stake in MUL through a Rs 4 billion rights issue by which government would divest its share in favour of its equal joint venture partner Suzuki.

The government has also finalised restructuring plans to expedite the privatisation of loss making companies Paradeep Phospates and Jessops.

Announcing the decision of Cabinet Committee on Divestment on Wednesday, the Divestment Minister Arun Shourie told reporters that financial and technical bids would be invited within 4 to 5 days for divesting 74 per cent in Paradeep Phosphates and 72 per cent in Jessops.

CCD also approved share purchase and shareholders agreement for Paradeep Phospates, the divestment minister said.

Shourie said CCD decided on a five-point strategy for divestment of non-strategic public sector undertakings, which have not yet been referred to the divestment commission.

These companies would be referred to the reconstituted divestment commission.

About Paradeep Phosphtes, Shourie said CCD had approved conversion of outstanding of preference share capital of Rs 1.18 billion into equity of the company, effective from March 2001.

It also decided to convert Rs 850 million of outstanding government's loan into equity share capital of PPL with effect from March 2001.

"The government will take over the contingent liability of Rs 3.32 billion (principal and interest including penalties) disputed between PPL and MMTC (Metals and Minerals Trading Corporation) and to get it resolved separately through the mechanism of Committee of Secretaries on Disputes," he said.

The financial restructuring will be implemented with divestment, he added.

Shourie said this was a 'landmark' decision of CCD as PPL and Jessops were suffering from financial losses.

"On authorised capital of Rs 4.67 billion, accumulated losses of PPL was Rs 4.31 billion as on March 2001."

PPL was making Rs 100 to Rs 150 million loss every month and its networth was at negative Rs 840 million, he said, adding Jessops losses stood at Rs 490 million on March 31, 2001.

(With additional inputs from Reuters)

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