Mumbai, March 19: The ambitious move of the government to sell part of its stake in Indian Petrochemical Corporation Ltd (IPCL) is likely to be delayed further as the share price of the company has taken a severe beating on the stock exchanges. The government had earlier postponed disinvestment in Indian Oil Corporation following the fall in the oil giant's share price.IPCL share prices dropped to the 52-week low level of Rs 58 on the Bombay Stock Exchange (BSE) on Thursday from its 52-week high of Rs 148. Since IPCL share prices have dropped considerably over the last few days, the bidders are likely to participate in the divestment process only after verifying the audited accounts for the current financial year. ``The sustained fall in the PSU's share prices has created confusion. Bidders are likely to press for lower valuation following the fall in share price,'' said a fund manager. IPCL is one of the leading players in the petrochemical sector in India with a turnover of Rs 3,114 crore during the year ended March 1999. ``It will not be appropriate if the government sells the IPCL stake on the basis of the current share price. The government will get a good price when the market picks up. IPCL is a blue chip company which cannot be thrown away for peanuts,'' said a fund manager. IPCL and Indian Oil are not the only cases where the government has postponed disinvestment in the current year. The government recently decided to put off listing of Mahanagar Telephone Nigam Ltd (MTNL) on a US stock exchange. MTNL share which touched Rs 390 a couple of weeks ago has now fallen back to Rs 276. If the domestic price remains subdued, the company will not be in a position to get a good price from the overseas issue. The government had planned a domestic and overseas issue in the case of Indian Oil. Here again, the share price has fallen from the 52-week high of Rs 325 to Rs 168 on March 16. With the BSE Sensex falling from the all-time high level of 6150 (February 14) to the 5102 level, brokers feel that the government should wait for the market to turn bullish for disinvestment. Other PSUs where the government has not planned any disinvestment are also going abegging on the stock markets. BHEL has crashed from the 52-week high of Rs 350 to Rs 120, BPCL from Rs 450 to Rs 219 and HPCL from Rs 245 to Rs 122. SAIL - which got a Rs 8,000 crore plus bail-out package from the government - is now quoted at Rs 8.20. ``Most of these shares lost ground when old economy shares were hammered on the market recently,'' analysts said. Reliance Industries and the IOC-Soros consortium are the two players in the race for the IPCL stake. With the IPCL unions up in arms against the divestment programme, the government may not be in a position to complete the stake sale by the end of the current fiscal. In that case, the proposed divestment will get delayed by another six months since IPCL takes at least four months to publish audited accounts. After the strategic sale, the government's stake in IPCL will come down to 34 per cent from the present level of 54 per cent. The holdings will come down further when a convertible bond issue - made in 1997 - is redeemed in 2002. If the bondholders opt for conversion, the Centre's stake will drop to 26 per cent. The government is believed to have set a target of Rs 800 crore from IPCL divestment and the bids are expected to be substantially higher than the current market price. The government may opt for the open-bidding process for the divestment. The sale process also got delayed with the bidders asking the government to spell out a definite time-frame for the sale of post-divestment stake. It is believed that Dow Chemicals and Mitsubishi Corporation opted out of the fray as the government refused to give a definite time-frame for the sale of stake after the completion of the divestment process. Bidders are skeptical of having management control with a minority stake. According to analysts, if PSU stocks remain weak on the stock markets, Finance Minister Yashwant Sinha is unlikely to meet his disinvestment target for the current year. Moreover, the government as the biggest shareholder will be the major loser in the PSU shares' price fall.
