Economic
Times — October 6, 2001
Breaking inertia over the
disinvestment programme, the government today decided to privatise two
companies, CMC and Hindustan teleprinters Ltd. Tata Sons gets 51 per
cent of CMC for Rs.152 crore while HFCL acquires 74 per cent of HTL
for rs.55 crore.
While the combined
realisation of rs.207 crore for the two companies is a tiny fraction
of the government’s disinvestment target of Rs.12,000 crore for the
year, the present decision of the Cabinet Committee on Disinvestment (CCD)
is significant for the political signal it sends. Considering the
intense political hostility that the privatisation of CMC and HTL is
guaranteed to generate, the government’s decision to go ahead with
the sale displays a welcome determination to get on with its agenda in
the face of stiff opposition.
In the case of CMC, the CCD
today approved the sale of 51 per cent of the company to Tata Sons for
rs.152 crore. TSL is the sole qualified bidder that remains after the
other bidder, CDC failed to submit the requisite bank guarantees. The
price of Rs. 197 per share offered by TSL and accepted by the
government is below the scrip’s recent quotes on the market. CMC
closed today at Rs. 213. The scrip’s price had gone above rs.400
after the government announced its intention to privatise the company.
Since only 7 per
cent of CMC’s equity is in the market, relatively
small amounts of money can be used to make the
share price register sharp swings. The government
has ordered an inquiry into CMC’s erratic share
price movements in the run-up to the present decision
on divestment. There will be a lock-in period
of two years for the new partner.
