IPCL goes into Reliance kitty

India8217;s largest corporate Reliance Industries Ltd finally ended its dry run as far as picking up public sector units are concerned. Bid...

India8217;s largest corporate Reliance Industries Ltd finally ended its dry run as far as picking up public sector units are concerned. Bidding aggressively, it offered to pay almost 80 per cent higher than the next bidder IOC, and even 76 per cent over the Government8217;s fixed reserved price of Rs 845.5 crore.

Reliance8217;s bid has been a controversial one with various lobbies trying to get the Government to disqualify it from the bidding process on the grounds that some company officials had been booked under the Official Secrets Act. While the Disinvestment Ministry had rejected this proposal many weeks ago, continued efforts by various groups ensured that the decision on selling off Indian Petrochemicals Ltd IPCL was put off on several occasions in the past few weeks. Reliance bid a total of Rs 1,490.84 crore to buy 26 per cent of the Government stake in public sector petrochemical unit IPCL, against IOC8217;s bid of Rs 826 crore.

Under the Sebi rules, Reliance will now have to make an open offer for 20 per cent of IPCL equity. This will have to be made at its offer price of Rs 231 per share which is around 80 per cent higher than the current market price of the IPCL share, which closed at Rs 132.70 on Friday. In several major petrochemicals Reliance and IPCL each control around 35-40 per cent of the market. With RIL now buying IPCL, it will control over 70 per cent of the market in many areas.

While commenting on this the RIL MD, Anil Ambani said 8216;8216;IPCL is a pioneer in the petrochemical industry and Reliance8217;s acquisition of IPCL will add value for both companies8217;8217;. The CCD met on Saturday under the chairmanship of Prime Minister and approved the disinvestment of 6.74 crore shares representing 26 per cent equity of Rs 5,800 crore public sector petrochemical major IPCL in favour of RIL.

Briefing newsmen about CCD meeting, disinvestment minister Arun Shourie said that RIL opted to purchase IPCL equity at Rs 231 per share. IOC had offered Rs 128 per share Rs 826 crore for 26 per cent stake and Nirma Rs 110 per share Rs 711 crore. There were only three bidders for the 26 per cent IPCL equity that was put up for sale. Government, which presently has 59.95 per cent equity in IPCL, has decided to offload 51 per cent stake in two phases. It would transfer management control to Reliance for 26 per cent stake initially and the new partner would have the right of refusal over the remaining 25 per cent equity.