IOC and ONGC May Be Roped in if BPCL Sale Does Not Get Desired Valuations
The government may consider roping in at least two of its blue-chip firms— Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC)—to participate in the strategic disinvestment of BPCL as an alternate plan if the current bidding process, open to private sector domestic and global players, failed to get the desired interest or valuation, two officials privy to discussions on the issue said.
 
Anil Agarwal's Vedanta group and a couple of overseas funds are said to be among 'multiple suitors' for state-owned Bharat Petroleum Corporation Ltd (BPCL) in the initial expression of intent (EoI) stage, bids for which closed on Monday. But several global players, including Aramco, Adnoc, Rosneft, etc, have stayed out of the race.
 
Even with multiple suitors, the interest level for BPCL remains low in the current subdued market conditions. If at price bidding stage early next month, government shares fetch lower prices, a fresh bidding may be called for BPCL that may allow PSU (public sector unit) participation, the official sources said.
 
A disinvestment department official, however, ruled out re-bids for BPCL as interest levels remained 'adequate' in current round of bidding.
 
The sources said that participation from companies such as IOC and ONGC may only be a contingency measure in case of a muted response from prospective private bidders. The government is hopeful that current bidding may result in finalisation of sale deal for BPCL and alternate mechanism may not be required to be invoked.
 
For the government, BPCL's disinvestment is important to achieve its high disinvestment target of Rs2.1 lakh crore for the current fiscal. So far, the government has garnered just over Rs5,000 crore in disinvestment receipts.
 
The government is selling its entire 53.29% stake in BPCL to a strategic investor to mobilise over Rs50,000 crore as disinvestment receipt.
 
BPCL operates refineries in Mumbai, Kochi, Bina and Numaligarh but the facility in Assam is being hived off. The company accounts for 15% of the India's refining capacity of close to 250 million tonnes.
 
The public sector company also owns 15,177 petrol pumps, 6,011 LPG (liquefied petroleum gas) distributorships and 51 LPG bottling plants.
 
BPCL distributes 21% of petroleum products consumed in the country and owns a fifth of the 250 aviation fuel stations in the country.
 
Despite being a good takeover target, the company's sale plan had to be postponed on four occasions since March. The concern now is that the pandemic does not result in distress sale of this valuable government asset.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    tillan2k

    1 week ago

    ONGC and IOC is being rope In .. it is rope trick by Govt . Mere book transfer from one PSU to other is accommodation entry and not monetisation of assets

    REPLY

    tlrchandran49

    In Reply to tillan2k 1 week ago

    GoI should have allowed PSUs also for participation. That step would have raised the bidding price or else BPCL would have been transferred to IOC seamlessly. Somebody in DIPAM is short sighted.

    Newme

    1 week ago

    Vedanta Anil Agarwal is a shrewd miser. He will try to buy BPCL at rock bottom price like he bought HZ and Balco.

    Few Corporate Takers for One Time Debt Restructuring amidst COVID: Report
    There are few takers for the One Time Debt Restructuring (OTDR) Scheme announced by the Reserve Bank of India (RBI) in August 2020 for corporate borrowers having an aggregate exposure of greater than Rs25 crore and were under stress due to the coronavirus (COVID-19) pandemic, says a report from ratings agency CRISIL. 
     
    "As many as 99% of companies, excluding micro, medium and small enterprises (MSMEs) rated by CRISIL are unlikely to opt for the RBI's OTDR, a preliminary analysis of 3,523 such non-MSME companies indicates. But of the CRISIL sample, only about 1% indicated that they would apply for OTDR. This is despite two-thirds of the rated entities being eligible based on the parameters proposed by the KV Kamath Committee set up by the RBI," the ratings agency says. 
     
    According to Subodh Rai, senior director of CRISIL Ratings, improving business sentiment on account of increased economic activity over the past couple of months and expectation of a sharp recovery next fiscal are persuading borrowers to skip OTDR. Another deterrent, he says, is the impact on the borrower's long-term credit history - accounts of those opting for OTDR would be classified as restructured advances by lenders, which could impact their ability to raise debt in future. 
     
    Additionally, for about 44% of CRISIL-rated corporates, more than three-fourth of their debt comprises short-term working capital facilities (see chart below). In these cases, availing of OTDR would have negligible benefits, as the resolution plans under this scheme are focused on deferring principal repayment of long-term debt, the ratings agency says.
     
     
    CRISIL says, instead of opting for debt recast, such borrowers may prefer to seek additional working capital financing as announced by the RBI under its OVID-19 regulatory package. 
     
    Early into the lock-down, 968 companies, or about 27% of the CRISIL sample set, had opted for the moratorium allowed by RBI. As much as 98% of these are not seeking an OTDR for reasons mentioned earlier.
     
     
    Sameer Charania, director of CRISIL Ratings says, “The recently announced emergency credit line guarantee scheme (ECLGS) for the health care sector and 26 other stressed sectors, which allows companies to borrow up to 20% of their outstanding dues, will further dissuade borrowers—especially those facing temporary liquidity issues—from opting for debt recast. However, companies that belong to highly impacted sectors such as hotels, retail, real estate, and textiles would still prefer OTDR given their longer business-recovery timelines.”
     
    That said, the ratings agency says, these are early days and greater clarity will emerge as we move closer to the regulatory deadline of 31 December 2020, set by RBI for invoking debt restructuring plans. "The number of companies seeking OTDR may increase if sentiment around recovery dampens or Covid-19 afflictions keep increasing, leading to fresh curbs on economic activity," CRISIL added.
  • Like this story? Get our top stories by email.

    User 

    Chinese Huawei sells Honor smartphone business to 'ensure its own survival'
    Struggling to keep its consumer business afloat in the wake of the US sanctions, Chinese conglomerate Huawei on Tuesday announced to sell off its Honor smartphone business assets to China-based Shenzhen Zhixin New Information Technology Co Ltd.
     
    The company said that the sale -- which could be around $15 billion according to multiple reports -- will help Honor's channel sellers and suppliers make it through this difficult time.
     
    Honor smartphones have been hit by US sanctions that prevent Huawei from doing business with the US companies.
     
    "Once the sale is complete, Huawei will not hold any shares or be involved in any business management or decision-making activities in the new Honor company," the company said in a statement.
     
    "Huawei's consumer business has been under tremendous pressure as of late. This has been due to a persistent unavailability of technical elements needed for our mobile phone business," it added.
     
    Huawei said the move has been made by Honor's industry chain to "ensure its own survival".
     
    Over 30 agents and dealers of the Honor brand first proposed this acquisition.
     
    Since its creation in 2013, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range.
     
    "During these past seven years, Honor has developed into a smartphone brand that ships over 70 million units annually," Huawei said.
     
    In India, Honor recently entered the laptop market and also expanded its wearables portfolio in the country.
     
    According to the Charles Peng, President, Honor India, the company's entry into the India laptop market in August this year has also turned out to be a success.
     
    Launched at Rs 42,990, the company's introductory laptop, Honor MagicBook 15, comes with 8GB RAM, 256GB SSD, a hidden pop-up webcam, 2-in-1 fingerprint power button and a compact 65W fast charger.
     
    "It was sold out within seconds as soon as it went online. Further, we have received encouraging and positive feedback from our consumers who wish to own a PC that fulfills their requirements as well as suits their personality with a premium product at a competitive price," Peng told IANS last month.
     
    "On future prospects, we are confident about our performance in India. We aim to create an intelligent new world for individuals by developing a smart living ecosystem having a diverse product portfolio including smart band, smartwatch, smart audio, laptops, and smartphones," he said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    s5rwav

    2 weeks ago

    On Cyber Security Concern, USA Rightly Banned Huawei Products and it is High Time India also Ban its Prodcts. I am Babubhai Vaghela from Ahmedabad. Thanks.

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone