Govt to ease stake-transfer norms in HCL to woo firms

Nisha Das
02 May 2003

A decision to this effect has been taken in the case of HCL where the government is divesting all its equity by incorporating the new provisions in the transaction documents, merchant banking sources close to the development said.

The ministry will facilitate a more flexible approach towards intra-group transfers of the HCL stake. It will also make restructuring hassle-free, the sources say. Under the current ministry norms, government permission is needed to effect any transfer of stake by a strategic partner in a divested company.

Under the new norms, government approval will not be required in case the equity in HCL is transferred from the company to its subsidiaries or any other group companies of the successful bidder. At present, Sterlite Industries and Biral Copper are the remaining bidders for HCL.

The government currently holds a 98-per cent stake in the copper major, which will be divested to a partner along with management control. AF Ferguson has been mandated as the global advisor.

Recently, the core group of secretaries on divestment had cleared the transaction documents for the sale of equity. The group had, while approving the documents, rejected a demand by bidders seeking a further round of restructuring.

Last year the union cabinet had approved a restructuring package for the company to the tune of Rs 440 crore, including an element of cash infusion support for separation package and extension of guarantees towards a loan. The copper major has a workforce of around 6,500 and has been incurring losses for the past several years.