The employees of the state-owned Manganese Ore, who have expressed interest in picking up the government stake slated for divestment, are likely to be the first ones to be affected by the guidelines announced on Wednesday for staff participation in strategic sale.

The divestment process for the company was in the initial stages, so employees had time to put together a bid for the company, divestment ministry officials said.

The guidelines will, however, apply with prospective effect and not with retrospective effect, so that in companies where the sale process is in an advanced stage will not be affected.

"If bids have already been called for or if prospective bidders have been shortlisted, there is no question of applying these guidelines," officials said.

However, the guidelines were meant for general application and it was difficult to say in which companies employee interest would be generated, they said.

By and large, it was the service-related companies where employee buyouts were most likely, they added.

The clause requiring employees to contribute at least 10 per cent of the financial bid was introduced to ensure employees had a personal stake in the business of buying out the company.

"We wanted to avoid a situation in which employees, after buying the company, let it go," they said.

The 10 per cent limit is not a big amount and employees can borrow the money. The employees, along with the associated bidders, will have to satisfy the net-worth criterion because in case of default, the government will penalise the buyer.

If the purchaser defaults on obligations like protecting employee interests or attempts asset stripping, the government needs to recover the penalty from them.

Earlier, the government used to specify turnover criteria as an indicator of bidders' capacity to handle operations in the scale of the public sector unit proposed to be sold.

However, for employee bids, there is no question of having a turnover criterion and only a net-worth criterion will have to be fulfilled.