The Hindu Business Line : Divestment panel for strategic sale of Andrew Yule

THE Disinvestment Commission has recommended privatisation of the Kolkata-based loss-making public sector undertaking Andrew Yule and Co Ltd (AYCL) to a strategic partner and sale of 40 per cent Government stake in Indian Vaccine Corporation Ltd (IVCL) to Reliance-controlled IPCL.

In its 24th report, the commission said that the Government should sell its entire 93 per cent equity in the multi-product, multi- location company to a strategic partner and undertake restructuring of the company in consultation with the prospective bidders.

The commission categorised AYCL as non-strategic, arguing that there was no rationale for the company to continue as a PSU.

AYCL was set up in 1863 during the British Raj and became a PSU in 1979. It currently acts as a group company holding stakes in a number of state-owned firms including Hooghly Printing and Tide Water.

The commission also favoured disinvestment of equity in the group companies of AYCL and asked the Government to implement transfer of 26 per cent stake in Descon to AYCL.

In case a suitable partner could not be identified, then the sale should be undertaken on a divisional basis after demerger of the units, the divestment panel has said.

AYCL operates four units including tea and electrical divisions with most of the business running in losses. The company has been incurring losses for the past 3 years and was referred to BIFR. AYCL shares are traded on the Kolkata and Mumbai stock exchanges.

In the case of Indian Vaccine Corporation, the commission has favoured selling 40 per cent Government holding to promoters of IPCL. If IPCL refuses to buy the stake, then the Government should invite fresh bids for the share sale.

However, it has asked the Government to retain the remaining 26 per cent stake till IVCOL develops into a full-fledged company.

IVCOL was set up in 1989 for making human vaccines for combating polio with 66 per cent of its Rs 18-crore paid up capital subscribed by the Government and balance by IPCL.

The commission said that the Government should retain Educational Consultants India Ltd (EdCIL) as a PSU for some more time. A review can be undertaken after a period of three years to assess the need for privatisation of the company.

The commission has asked the company to widen its client base and reduce dependence on Government contracts while withdrawing a portion of its cash surplus.

The Government currently holds 100 per cent stake in the company which employs 91 people and has an authorised share capital of Rs 2 crore.