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Tuesday, Jul 02, 2002

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Industry & Economy - Disinvestment

Iffco-Kribhco may not take part in SCI disinvestment

P. Manoj


THE co-operative fertiliser team of Iffco-Kribhco is set to pull out of the race for acquiring a controlling stake of 51 per cent in Shipping Corporation of India (SCI).

"We will take an internal approval not to take further part in SCI disinvestment process and convey the decision to the Government/advisors early next week'', a top official with Kribhco told Business Line.

"Considering the valuation and the market price at which SCI shares are hovering, it does not appear to be a viable option'', the official said pointing to the reasons for opting out of the SCI bidding process.

The Iffco-Kribhco team had decided to drop out of the race after completing two rounds of due diligence in early May and on Monday, the official said adding that the team had gained valuable experience from studying the data room and the financials of a company lined up for privatisation.

The fertiliser-combine hopes to cash in on this experience when it bids for HPCL or BPCL when these companies are lined up for sale, according to the official.

The departure of Iffco-Kribhco team would thus leave only five players in the fray for acquiring SCI including Great Eastern Shipping Company (GESCO), Essar Shipping Ltd, Aban Loyd Chiles Off-Shore Ltd-Qatar Shipping Company, Sterlite Group (advised by Varun Shipping Company Limited) and Malaysia International Shipping Corporation Bhd (MISC).

With the SCI deal now expected to be concluded by late August or early September, the Government has extended till July 30, the deadline for finalising the bidding consortium by the short-listed bidders. The original deadline for this was June 30.

In the case of foreign bidders, the consortium will have to form a special purpose vehicle (SPV) incorporated in India which should be owned and majority controlled by Indian people so that foreign participation through the SPV in SCI should not exceed 25 per cent of the paid-up capital of the company.

As such, the foreign bidders will have to join hands with a domestic entity holding 26 per cent stake in the SPV.

The Government is currently in the process of selling 51 per cent of its stake in SCI to a strategic partner along with transfer of management control.

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