The Hindu Business Line : Hurdles cleared for Ruia Group to acquire HIWL

The Ruia Group appears to have crossed the final hurdle to the acquisition of Hirakud Industrial Works Ltd (HIWL) from the Industrial Development Corporation of Orissa Ltd (IDCOL), an Orissa Government undertaking.

In a ruling dated May 19, 2006, the Orissa High Court has put IDCOL's decision to open fresh tenders for privatisation of HIWL on hold and favoured Ruia group's petition that it was subjected to injustice on the part of IDCOL. A Ruia Group company, Varsha Fabrics, had earlier won the race for acquisition of HIWL at an estimated cost of Rs 5.25 crore.

However, the bid was cancelled by IDCOL allegedly owing to the Ruia Group's inability to complete the share purchase agreement (SPA) latest by March 8, 2006. IDCOL had also invited fresh bids for privatisation of HIWL.

Responding to a petition by the Ruia Group, the HC concluded that IDCOL's direction to complete the SPA within a week was "unilateral, impractical and an impossibility" and granted a fresh time limit of two months to the Ruia Group.

The court had also outlined a time frame of two weeks for completion of the tripartite agreement between labour unions, IDCOL and the Ruia Group.

In case of any delay on the part of labour unions in concluding the pact, as it has happened in the past, IDCOL and Ruia Group need not wait for the same and were free to strike the share purchase agreement.

It may be mentioned that reacting to a previous petition by the labour unions, the court made it binding on the part of IDCOL and the Ruia Group to strike the labour pact before share transfer.

When contacted by Business Line, the Ruia Group Chairman, Mr P.K. Ruia, said that as per the court directive, Varsha Fabrics had immediately submitted the promised sum of Rs 5.25 crore through a draft in favour of IDCOL for gaining 100 per cent control over HIWL.

The company has also requested the labour unions and IDCOL to conclude the tripartite agreement. However, no response was received against the same from the labour unions till June 2.

Though the Ruia Group emerged the highest bidder for HIWL almost three years ago, the acquisition was delayed owing to the prolonged legal tangle arising primarily out of several court cases filed by the lenders and the labour unions.

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