The Department of Investment and Public Asset Management (Dipam) has started the sale process of Bharat Petroleum Corp Ltd (BPCL) more than a month before the Cabinet decision last Wednesday to sell the entire government stake in the oil major.
In the run-up to the decision, the Dipam had on October 11 issued advertisements seeking transaction and legal advisors as well as asset valuers for the stake sale, but masked the identity of the state-owned firm by merely saying they operate under the administrative control of the Ministry of Petroleum and Natural Gas, or Ministry of Power, or Ministry of Shipping or Ministry of Railways.
After that on November 20, the Cabinet Committee on Economic Affairs (CCEA) gave the go-ahead for the BPCL sell-off.
Soon after the Cabinet approval, Dipam unmasked the identity of disinvestment targets by issuing ‘corrigendum’ to the October 11 Request for Proposals. The RFP wanted asset valuer to identify, describe and list all properties and assets, including intangibles, and value them by comparison method, income capitalisation, discounted cash flow, cost aproach or re-placement valuation method.
The corrigendum said: "Strategic disinvestment of state of Government of India in a CPSE may be read as 'Strategic disinvestment of Government of India shareholding of 53.29 per cent in BPCL (except its equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd (NRL) and management control thereon) along with transfer of management control to a strategic buyer."
It may be noted that the CCEA also approved sale of the government’s entire stake in Shipping Corpor-ation of India Ltd (SCI), THDC India Ltd and North Eastern Electric Power Corp Ltd, or Neepco, to a strategic investor along with management control. It also approved sale of 30.8 per cent of its 54.8 per cent interest in Container Corp of India Ltd, or Concor.
Apparently in a hurry to conclude the sale of BPCL within this fiscal, the Dipam has set a 50-day deadline for an outside asset valuer to carry out the valuation of all assets of the oil major from the date of issue of an appointment letter, as per the RFP.
The last day for submission of bids for appointment as asset valuer was November 4.
According to sources, once the process of valuation is completed, invitation of price bids from potential acquirers can be done soon after. “The stake sale will follow a two-stage process of first inviting expression of interest (EoI) from potential bidders, who will after due diligence be asked to submit price bids in the second part,” the source said.
Sources, however, said that the Dipam might invite EoI from potential bidders pending receipt of valuation report but price bids will come in only after getting the valuation report. A similar process will be followed for SCI and Concor, they said....