Search the Internet          Tips  Sites: Finance, Investment

Government to invite financial bids for CMC soon

The government said it will invite price bids soon for computer software and hardware maintenance firm CMC after a cabinet panel approved the shareholders agreement for the stake sale in the company on Wednesday.

"The process is almost complete in CMC and it will be the first company for which we will invite financial bids soon," Union Divestment Minister Arun Shourie told reporters after a meeting of the Cabinet Committee on Divestment.

In state-run software service and computer maintenance firm CMC Ltd, the government which owns 80 per cent stake, is selling 57.3 per cent to a combination of a strategic partner, employees and others.

US-based computer giant Hewlett Packard and two leading Indian information technology firms Wipro Ltd and unlisted Tata Consultancy Services Ltd are among 15 shortlisted bidders for CMC.

CMC reported net profits of Rs 244.6 million on net sales of Rs 5.34 billion in the year to March. Its shares ended 0.32 per cent higher at Rs 305.95 on Wednesday in an overall flat market.

Shourie said the government had also approved the creation of shell companies for divestment in Indian Tourism Development Corporation and IBP.

"To take forward the divestment in IBP, Balmer Lawrie will be hived off into a separate company which will be disinvested later," Shourie said.

IBP owns 62 per cent of Balmer Lawrie which is engaged in a wide range of businesses such as industrial packaging and lubricant manufacturing.

The government holds 59.69 per cent of IBP's Rs 221.5-million equity, 23.37 per cent is widely distributed, 16.35 per cent rests with financial institutions and banks while employees hold 0.7 per cent.

A host of global oil companies and home-grown giants are in the race for the government's stake in IBP in an effort to grab a slice of India's fast-growing petroleum retail marketing pie.

IBP closed up 1.09 per cent at Rs 359.95 on the BSE.

Shourie said the cabinet panel also approved the shareholder agreement for Hindustan Teleprinters Ltd in which it is selling a 74 per cent stake.

He said it also allowed Binani Zinc to participate in the bidding process in Hindustan Zinc Ltd. "A question had been raised about Binani Zinc acquiring a monopoly if it acquires a stake in Hindustan Zinc," Shourie said.

In December 2000, the government, which owns 75.92 per cent of HZL, invited proposals from strategic partners to buy a 26 per cent stake as part of its decade-old drive to privatise state-run companies.

HZL has five lead-zinc mines with a combined annual capacity of 3.49 million tonnes and four lead-zinc smelters with a combined annual zinc capacity of 169,000 tonnes and lead capacity of 65,000 tonnes.

An HZL official had earlier said that Indian firms Bhushan Steel and Strips, Sterlite Industries, Binani Industries and Indo-Gulf Fertilisers had shown an interest in buying a stake.

Korea Zinc, London-based Allied Deals and Swiss-based commodities group Glencore and Britain-based Metdist had also shown interest, he said.

Hindustan Zinc rose 2.43 per cent to end the day at Rs 18.95.

Tell us what you think of this report