The Supreme Court judgement on the Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd selloffs has thrown into disarray the divestment exercise for the current fiscal.
In fact, the government is now considering making legal clearance a pre-requisite for kickstarting the divestment process of any public sector undertaking in the future.
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Though the government had decided to go ahead with the sale of HPCL and BPCL only after receiving a favourable response from the Attorney General, its plans went awry.
Maruti, in which the government had given up control in favour of its joint venture partner and successfully concluded an initial public offering, was also created by an Act of Parliament.
Even though the Supreme Court judgment would not apply with retrospective effect, a public interest litigation now cannot be ruled out.
"Given Maruti's very successful IPO and the fact that there is no employee disenchantment, we do not expect to be dragged to the court," an official said.
The three big-ticket divestments planned for this year -- National Aluminum Company, HPCL and BPCL have all been put on the backburner.
A status check on some of the other companies earmarked for divestment this fiscal reveals that even the Hindustan Copper Ltd divestment may run into rough weather.
Price bids for HCL have been called, but there is an uncertainty over the process, following Tuesday's Supreme Court judgment.
The reason being that the company's Ghatshila complex, located in the Jharkand mining belt, was acquired through the parliamentary route.
The CCD, in its last meeting, had cleared the transaction documents for sale of National Fertilisers Ltd and HCL.
The bids for NFL turned out to be below the reserve price arrived at by the advisers for the sale and the next CCD would decide the course of action for the urea giant.
Transaction documents for State Trading Corporation, Engineers India Ltd and Balmer Lawrie have been cleared at the secretary level and are awaiting the CCD's nod.
The government had decided to divest its residual stake in the privatised PSUs -- CMC, VSNL, IBP, Balco and IPCL through market offerings. Recently, the divestment ministry invited expressions of interest from merchant bankers to assist in the IBP offload.
Due diligence for Madras Fertilisers was completed in the first week of September, and after addressing concerns of the interested parties, transaction documents are expected to be firmed up by next month.
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