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Govt likely to finalise IPCL sale on Saturday

The government is likely to wrap up the keenly awaited privatisation of Indian Petrochemicals Corporation Ltd, the sector's second-largest company, on Saturday, a senior government official told Reuters.

In the race for IPCL are Indian Oil Corp, India's largest refiner which is controlled by the state, Reliance Industries, the No 1 petrochemicals maker, and Nirma, a detergents and chemicals maker. The government is selling a 26 per cent stake with management control.

"The meeting is expected to be held on Saturday before the prime minister leaves for a holiday," a divestment ministry official, who declined to be identified, said on Thursday.

Prime Minister Atal Behari Vajpayee, who heads the cabinet panel on privatisation, is expected to depart on May 20.

The sale, which would be the second big privatisation of the financial year to March 2003, is expected to help the cash-strapped government bridge a yawning fiscal deficit.

The government, which now owns nearly 60 per cent of IPCL, had postponed the sale to an unspecified date from May 14, disappointing investors and dragging down shares of state-run firms, which in recent weeks have been surging on privatisation hopes.

The government plans to raise Rs 120 billion from sales of shares in state-run firms in the current financial year. It has consistently failed to meet targets in the past, but the process got a shot in the arm after the government sold stakes in a giant telecoms company and an oil firm in February.

ADVISER FOR NALCO

Then on Tuesday, India moved to exit the carmaking business, allowing Japan's Suzuki Motor Corp to take majority control of Maruti Udyog Limited, the country's largest carmaker.

Analysts said the privatisation of Maruti will send a positive signal to foreign investors about the government's resolve to press ahead with tough reforms.

Some analysts had expected the government to softpedal privatisation for fear of losing mass support after it came under fire from the opposition and its own coalition partners for its handling of the country's worst religious violence in a decade in Gujarat.

The official said the privatisation panel is also expected to choose an adviser for the stake sale in National Aluminium Company, the country's second-largest aluminium firm.

The government holds a little more than 87 per cent in NALCO and plans to reduce its stake to 26 per cent by first selling 10 per cent through a domestic issue and then 20 per cent through the issue of American Depositary Receipts.

This is to be followed by the sale of slightly more than 29 per cent to a strategic partner after reserving two per cent for employees.

The panel is also expected to call for bidders to submit their offer prices for a 51 per cent stake in National Fertilisers Ltd, the official said.

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