The Cabinet Committee on Economic Affairs (CCEA), scheduled to meet on Thursday, will likely revisit the issue of granting call options to successful bidders in the strategic sale of public-sector undertakings (PSUs) between 2000 and 2003, paving the way for the government to take a call on whether it wished to sell its residual stake in these firms.
The companies likely to figure in the CCEA discussion are telecom company Videsh Sanchar Nigam Ltd (VSNL), Jessop & Company and Paradip Phosphates.
The “survivability of call options” provision of the shareholders agreement (signed between the government and the buyers of the public sector firms) is likely to figure in the CCEA discussion, said a government official who did not wish to be named. In January, the government tasked a group of ministers to make recommendations on the residual stakes it controls in VSNL, Paradip Phosphates and Jessop & Company.
The call option that the Tata Group had to buy out the government’s residual 26.12% stake in VSNL expired in February, five years after the group acquired VSNL.
While the Tatas did not exercise their call option, another company that did, Sterlite Industries (for the government’s residual stake in Bharat Aluminium Co. Ltd) saw a disagreement over the pricing of the stake and eventually resulted in a lawsuit.
CCEA also proposes to allow public-sector undertakings to invest in mutual funds as another option of parking their surplus funds, said the official. Currently, guidelines governing PSUs’ investment disallow deployment of surplus funds in mutual funds, the official added.
The CCEA is also likely to clear phase III of India’s AIDS Control Programme.