CMC, HTL divestment complete

Mumbai: The government has finally managed to set its public sector undertaking (PSU) divestment programme rolling by selling Computer Maintenance Corporation (CMC) and Hindustan Teleprinters (HTL).

CMC and HTL have become the first two PSUs to get sold in the current fiscal. While a 51 per cent stake in CMC went to Tata Sons for Rs 152 crore, the scam-tainted Himachal Futuristic Communications picked up a 74 per cent stake in HTL for a sum of Rs 55 crore, fetching the government a total of Rs 207 crore. The amount, however, is a long way off from the PSU sale target of Rs 12,000 crore set by Finance Minister Yashwant Sinha in the 2001-02 Budget.

Tata Sons had offered Rs 197 per share and was left as the lone bidder for the CMC stake after CMC employees and Commonwealth Maintenance Corporation, as other bidders, failed to provide the requisite bank guarantees. Tata Sons offer price was way above the governments reserve price of Rs 108.80 crore for the said 51-per cent stake. The reserve price was arrived at after the government valued CMC under four different methods: the discounted cash flow, asset valuation, balance sheet and comparable companies. The four methods yielded values of Rs 213.50 crore, Rs 37.60 crore, Rs 72.70 crore and Rs 102.50 crore respectively. The Tatas will now make an open offer for the balance 20 per cent stake at a price, which will have to be substantially higher than Rs 197 as per Sebi takeover guidelines.

About the other bidders. They had decided to raise funds for the bank guarantee by hypothecating CMC shares with banks. The government disallowed this move. As bank guarantee is an integral condition for the bid, which failed, the bid too got rejected.

Of the Rs15-crore equity capital of CMC, as much as 83.32 per cent is held by the government, 8.04 per cent by insurance companies, 3.09 per cent by domestic mutual funds, 0.38 per cent foreign holding and 5.17 per cent by the public, the free float. There has been some dispute about the price at which CMC has been sold to the Tatas, especially in light of the fact that in recent times the CMC stock moved up to touch a high of Rs 400.