The Hindu Business Line : Norms for natural asset cos still to be finalised

THE privatisation process of National Aluminium Company Ltd (Nalco) and Manganese Ore (India) Ltd (MOIL) have been put on hold till the Government finalises the guidelines for disinvestment in natural asset companies.

The Ministries of Disinvestment and Finance have been working in tandem on drafting the guidelines for disinvestment in natural asset companies following an announcement made by the Disinvestment Minister, Mr Arun Shourie, in Parliament on December 9, 2002.

The Government equity in natural asset companies will be disinvested, but this would be subject to certain specific conditions.

"The Disinvestment and Finance Ministries have not been able to come to an understanding on these specific conditions ", Government sources said.

The Disinvestment Ministry had started the process of privatising Nalco late last year through a three-stage process comprising a 10 per cent domestic offering, a 20 per cent American Depository Receipts (ADR) issue followed by a strategic sale of 29.15 per cent Government stake in the aluminium major.

But, the process had to be suspended at the due diligence stage when officials from the A V Birla-promoted Hindalco Industries were roughed up by employees of Nalco at the plant in Orissa in October 2002.

The Government has put on hold the due diligence process in Nalco till a "congenial environment" is created for the bidders to undertake plant visits without being assaulted by the employees and locals.

The Government has also initiated the privatisation of MOIL through strategic sale of 51 per cent equity.

The Government is currently working out guidelines for management-employee buy-out for PSU disinvestment which will be applied first in the case of MOIL.

The Disinvestment Ministry has said that a bid by the management-employees of MOIL in collaboration with a venture capitalist or a financial institution/bank will be considered if the legal entity so formed is qualified to bid and make a competitive price offer.

With both Nalco and MOIL categorised as natural asset companies, the privatisation process of both will have to wait till the guidelines on disinvestment in such companies are framed by the Government.

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