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Tuesday, Feb 17, 2004

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Srei Capital to be advisor for Idcol sell-off

Our Bureau

Kolkata , Feb. 16

SREI Capital Markets Ltd, a wholly-owned subsidiary of Srei International Finance Ltd, has been appointed advisor by Industrial Development Corporation of Orissa Ltd (Idcol) for the disinvestment programme pertaining to four of its closed business units.

According to informed merchant banking sources, the work programme of Srei Capital will include valuation of the companies, structuring the transactions, preparation of information documents like share transfer memorandum and other bid documents, drafting legal documents like share purchase and leave & licence agreement, drawing up the evaluation criteria and assist in negotiations. In short, as consultants the company has been mandated to advise and undertake any other activity necessary for concluding the disinvestment programme.

It is further learnt that the fees for the assignment would be strictly on "success fee" basis, with provision for a `drop dead' fee in the event the transaction is called off at any stage.

As part of its on-going PSU reforms programme, the Government of Orissa, through the Department of Public Enterprises (DPE), intends to restructure the management of four of its undertakings for long-term revival and operations through sale of assets, transfer of shares and leave & licence agreement. Idcol has appointed Srei Capital to advise, manage and assist in selecting a purchaser/strategic investor or a licensee and also provide the necessary consultancy to execute the aforesaid.

It is learnt that since all the four undertakings are inoperative at the moment, the transactions, as per the advice of Idcol, should be taken up in accordance with and subject to clearance from the Debt Recovery Tribunals (DRTs) and the High Court of Orissa.

The four undertakings are SN Coporation Ltd, which closed down manufacturing operations (High Tensile Fasteners) in November 1998, Orichem Ltd, which shut down in October 2000, ABS Orissa Spinning, which is now under DRT and High Court and whose operations closed down since March 2003 and IDCOL Piping & Engineering Works Ltd, Bhubaneshwar (closed since August 2000).

It may be recalled that Srei Capital had also been appointed by the Orissa Government as marketing advisor for sale of Nayagarh Sugar Mills in 2003.

The last disinvestment programme of Idcol involved its cement subsidiary, Idcol Cements Ltd, which was acquired by ACC in December 2003.

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