Armed with the financial backing from Union Bank of India, the employees of the state-owned Manganese Ore India Ltd (MOIL) have offered to buy out the Central government's to-be-divested 51 per cent stake in the company.
The three major trade bodies -- Indian National Trade Union Congress, MOIL Executives Association, and Rashtriya Manganese Mazdoor Strength -- have proposed to the Union government that they be allowed to buy out the stake.
The government has agreed to let the employees 'bid', but has ruled out a 'direct strategic sale'.
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Pradip Baijal, secretary, ministry of disinvestment, said, "We have informed the employees that they are free to bid. However, we have turned down the demand that their bid be treated at Re 1 over the highest bid. If we accede to this request, no one will bid for the company."
Baijal said the employees can bid in conjunction with a financial partner, possibly a venture capitalist.
The Union government holds about 82 per cent stake in the company, while the state governments of Maharashtra and Madhya Pradesh hold about 9 per cent each.
Surprisingly, earlier, the trade bodies had opposed the privatisation of the public sector unit. They had taken the view that the privatisation be deferred as MOIL is a profit-making firm.
Even Digvijay Singh, chief minister of Madhya Pradesh, advocated the trade bodies' view. He even had thrown his weight behind divestment to the employees.
But the department of disinvestment had taken the line that, globally, the model (selling stake to employees) was not much successful.
It said issues such as taking over the management control, infusion of funds, and technology may be difficult to resolve if the employees turned owners.
The department also felt that the takeover by the employees would hinder a smooth transition. Consequently, it suggested the employees to participate in the bidding process along with with a financial partner, and had strongly opposed a direct sale to them.
Now, even the Cetre has bought the view.