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Money > Business Headlines > Report November 11, 2002 | 1638 IST |
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Engineers India divestment ruled out for now
Union Divestment Secretary Pradip Baijal on Monday ruled out the divestment of Engineers India Ltd in the immediate future, saying its privatisation should be timed with the sell-off in major state-owned firms such as Bharat Petroleum Corporation and Hindustan Petroleum Corporation. Talking to reporters on the sidelines of a seminar on corporate governance in Mumbai, he said EIL was basically a public sector consultancy firm with over 50 per cent of its revenues being drawn on negotiated agreement for projects of major state-owned oil firms. So when majority of the petroleum majors still remained with the government, how could you go for EIL divestment, asked Baijal. Such a move would lower the company's valuation, he said. On National Aluminium Company and National Fertilisers Ltd (NFL), he said the divestment ministry was going ahead with their privatisation and only the visit to plants was remaining. "However, all would depend on the government decision in respect of timing of the divestment," Baijal said. Later, addressing the conference on 'Promoting shareholder participation,' he said the government, as an owner, was eroding the shareholders value in the state-owned firms and this needs to be corrected through the divestment process. In this context, he mentioned that the government had to securitise Rs 20,000 crore (Rs 200 billion) outstanding bills of the state-owned National Thermal Power Corporation by issuing junk bonds against the dues of the state electricity boards last year. These bonds do not have any buyers in the market, he added. In 2001-02, the Centre used the tax payers' money to pay out Rs 20,000 crore to sustain activities of the public sector companies while it received only Rs 5,000 crore (Rs 50 billion) as dividends from them. This loss of the tax payer's money was making the once unpopular Divestment programme 'popular,' the secretary said. Shareholders have now started realising that the ownership of government had made the public sector firms richer by enhancing the service charges. Videsh Sanchar Nigam Ltd, as a public sector telecom giant, used to charge ten times more tariff from public for an outgoing overseas call as compared to an incoming call from the United States, he pointed out. In today's environment, the government's role in business had been diminished with markets being flooded with funds for viable projects while the state was left with mostly loss making business, Baijal said. UNI ALSO READ:
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