Search the Internet          Tips  Sites: Finance, Investment

Workers' interest in Balco would be fully protected: Shourie

Minister of State for Divestment Arun Shourie on Tuesday assured workers interest in Aluminium company Balco would be fully protected and all papers relating to the public sectors divestment would be submitted to the CAG (Comptroller and Auditor General) once the transactions with Sterlite Industries were completed to verify the transparency.

Making a statement on a 'calling attention' motion on Balco in the Rajya Sabha, Shourie said "once the transaction is complete, all documents and all papers relating to Balco divestment will be submitted to the office of CAG."

"In this case as in every case of divestment, the CAG will prepare a thorough assessment, send it to Parliament and release it to the people," he said adding the government has ensured that clauses are included in the Shareholders' Agreement to safeguard the interests of workers."

Meetings and consultations have been held with representatives of employees and special steps have been taken to protect their interests, Shourie said.

Asserting that the entire process of divestment in Balco has been conducted in public knowledge, Shourie said, "open, competitive bidding has been the essential ingredient of the process at every stage -- from the selection of the advisor to that of strategic partner."

The evaluation committee recommended that the bid of Rs 5.51 billion of Sterlite Industries be accepted as it was twice that of Rs 2.75 billion of other bidder, Birla's Hindalco and that it was higher the reserve price determined by it, he said.

The recommendation was then reported to the Cabinet Committee on Divestment, which accepted it after endorsement by the Inter-Ministerial Group and approval by the Core Group of Secretaries, Shourie said.

Giving elaborate technical details, Shourie said that the process of divestment in Balco had been on for almost four years and the detailed work on it had been going on for two years.

"The entire process had been conducted in public knowledge," he said adding the divestment policy has been discussed by the two Houses of Parliament in five lengthy debates and in the last two session alone more than 300 questions on divestment were answered.

Shourie said for a going concern, the appropriate method for valuation was the Discounted Cash Flow method as it assessed the future earnings to the present by a measure of opportunity cost of capital.

Accordingly the advisers undertook a detailed valuation exercise extending over several months, he said adding for 51 per cent of equity, they placed valuation through Discounted Cash Flow method at Rs 3.32 billion to Rs 5.07 billion.

Two other methods, comparable valuation method put the figures for 51 per cent equity at Rs 2.99 billion to Rs 4.64 billion and Balance Sheet method at Rs 3.05 billion to Rs 3.48 billion.

Budget 2001

Tell us what you think of this report