Financial Daily from THE HINDU group of publications
Tuesday, May 07, 2002
Financial Daily from THE HINDU group of publications Tuesday, May 07, 2002 |
|
|
|
|
|
Home Page
-
Disinvestment Industry & Economy - Disinvestment HPCL or BPCL the `real target' for Iffco-Kribhco
Harish Damodaran
NEW DELHI, May 6 IT is not the Shipping Corporation of India (SCI) but one of the two oil companies — HPCL or BPCL — which is the real target of acquisition for the Iffco-Kribhco combine. "Although, we are bidding for SCI and will undertake the due diligence, our real objective is to buy out one of the two oil PSUs whenever they are lined up for sale by the Union Government," top officials with the Iffco-Kribhco team told Business Line. "We are looking at SCI more as a dry run which will help us gain experience in bidding for one of the oil refining companies," the officials said. According to them, acquiring an oil refining company would help the two co-operatives secure their supplies of naphtha, the key feedstock for the manufacture of urea. But, backward integration is not the sole objective for acquiring an oil company. "We feel that our engineering and project implementation expertise can be usefully deployed in petroleum refining as well. Unlike shipping, petroleum is not entirely unrelated to our core business of urea," the officials stated. "The same is not the case with SCI, where we will not have anything to offer from our side. One of the options before us could be to run SCI on a management contract basis by inducting a joint venture Indian or foreign shipping company. But, all those who are talking to us are demanding a majority stake which we are not willing to concede," the officials disclosed. Given its combined war chest of huge cash reserves and surplus, many of the established entities in the shipping sector bidding for SCI are wooing the Iffco-Kribhco combine to team up for submitting a joint bid for SCI. Officials with the two fertiliser co-operative giants said that they did not envisage any problem for tying up funds for the proposed acquisition. As on March 31, 2001, Iffco had reserves and surplus of Rs 2,147 crore and a net worth of Rs 2,566 crore. Whereas, its borrowings amounted to only Rs 1,613 crore out of which Rs 725 crore were long term and Rs 888 crore were short term. On the other hand, Kribhco is a zero-debt entity with a net worth of Rs 2,000 crore. "Our by-laws permit us to borrow up to 10 times our net worth. This means we have the flexibility to raise at least Rs 45,000 crore as debt," the officials said. Iffco is currently able to borrow at 8.5 per cent in the short term. There would be no dearth of lenders who will provide long-term funds for 10 to 10.5 per cent, the officials stated. The Iffco-Kribco team is competing with Malaysia International Shipping Corporation Bhd, Orient Overseas Container Line Ltd, CMA-CGM, Gesco, Essar, Sterlite, Videocon, BPL and the Finolex group for acquiring a controlling stake of 51 per cent in SCI.
Send this article to Friends by E-Mail
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|