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Sunday, May 19, 2002

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Reliance bags IPCL for Rs 1,491 cr -- Quotes Rs 231 per share for 26 pc stake

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IN a further boost to its ambitious privatisation programme, the Centre today cleared the sale of 26 per cent of its equity stake in Indian Petrochemicals Corporation Ltd (IPCL), along with transfer of managerial control, to Reliance Industries Ltd (RIL) for a consideration of Rs 1,490.84 crore.

The Cabinet Committee on Disinvestment (CCD), which met here today, approved the sale of shares to RIL at a price of Rs 231 per share. This was against a price of Rs 110 quoted by Nirma Chemical Works Ltd and Rs 128 by Indian Oil Corporation and the reserve price of Rs 131 fixed by the Centre's Evaluation Committee (on the basis on the discounted cash flow methodology employed by the advisor, UBS Warburg).

Speaking to newspersons, the Disinvestment Minister, Mr Arun Shourie, said that at these prices, the value of Reliance's bid worked out to Rs 1,490.84 crore, as against Rs 826 crore of IOC and Rs 711 crore of Nirma.

"Reliance's bid also works out to be much higher than the value of Rs 845.5 crore arrived on the basis of the reserve price," he pointed out. Further, the bid price also translates into a P/E ratio of 23 times based on IPCL's earnings per share of Rs 10 for 2000-01, which was higher than the corresponding multiples of other petrochem companies such as Reliance (10.50) and Gas Authority of India Ltd (5.36).

The Centre currently holds Rs 148.8 crore, i.e., 59.95 per cent, of IPCL's paid-up share capital of Rs 248.22 crore.

Today's decision to offload 26 per cent of its equity to Reliance would reduce the face value of Centre's holding to Rs 84.26 crore or 33.94 per cent.

During the year ended March 31, 2001, IPCL recorded a profit after tax of Rs 248.91 crore on net sales of Rs 5,005.91 crore.

With reserves and surpluses of Rs 2,946.13 crore. IPCL's current products portfolio includes polymers, synthetic fibres, fibre intermediates, surfactants, industrial chemicals, catalysts and adsorbents.

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