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Business News/ Companies / News/  Government seeks to sell Scooters India stake, invites interest for advisers

New Delhi: The central government on Tuesday invited expressions of interest from consulting houses and legal firms to act as advisers to sell Scooters India Ltd, in which it has 93.74% stake, through the strategic disinvestment route.

It also lined up presentations of shortlisted book running lead managers for disinvestment up to 25% through the initial public offering route (IPO) of four defence firms—Bharat Dynamics Ltd, Garden Reach Shipbuilders & Engineers Ltd, Mazagon Dock Shipbuilders Ltd and Mishra Dhatu Nigam Ltd.

Equity markets regulator Securities and Exchange Board of India (Sebi) mandates all listed companies to have at least 25% public holding.

A senior finance ministry official, speaking under the condition of anonymity, said the ministry will again seek Cabinet approval after valuations are done by the selected advisers. The total turnover of Scooters India in 2016-17 was Rs152.10 crore and its net worth as on 31 March 2016 was Rs98.69 crore.

The listed company is engaged in developing, manufacturing and marketing of three wheelers and quality engineering products.

While the advisor will be required to undertake tasks relating to all aspects of the proposed strategic disinvestment culminating into successful completion of the transaction, the legal adviser will review and advise on all legal contracts, titles of property assets/real estate, intellectual property rights and contracts with employees.

The government has already started the process of appointing advisers for strategic stake sale of Pawan Hans, BEML Ltd, and certain units of Cement Corp. of India Ltd and Steel Authority of India Ltd. However, it has yet not succeeded in carrying out a single strategic disinvestment in last three years.

The Cabinet Committee on Economic Affairs (CCEA) had approved listing of 11 central public sector enterprises (CPSEs) in the equity market last month including the four defence companies mentioned above.

The list also included railway subsidiaries Rail Vikas Nigam Ltd, IRCON International Ltd, Indian Railway Finance Corp. Ltd, Indian Railway Catering and Tourism Corp. Ltd (IRCTC) and RITES Ltd.

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The government had said in a statement that the stake sale may include offers of fresh shares for raising resources from the market. “However, actual disinvestment in respect of each CPSE along with the mode of raising resources has been delegated for decisions on a case-by-case basis to the Alternative Mechanism, headed by the finance minister," it added.

The so-called Alternative Mechanism is a group of ministers headed by finance minister Arun Jaitley, which decides on the modalities of stake sale in public sector units.

The government set a target of mobilizing Rs46,500 crore from the sale of minority stakes and Rs15,000 crore from strategic disinvestment in the 2017-18 budget.

Under the new disinvestment policy, unveiled in the 2016-17 union budget, CPSEs having a positive net-worth, no accumulated losses and having earned profits in three preceding consecutive years are required to achieve mandatory listing norms of 25% public holding. It also spelt out the mechanism and procedure for time-bound listing of CPSEs.

After the Department of Investment and Public Asset Management (Dipam), along with the administrative ministry, identifies eligible CPSEs and takes CCEA approval, an inter-ministerial group (IMG) is to be constituted for the appointment of advisors/intermediaries within eight weeks from the date of constitution of the IMG.

Also, the listing of the CPSE on the stock market needs to be completed within 165 days of the administrative department giving its nod.

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Updated: 10 May 2017, 05:20 AM IST
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