Electronics Corp IPO mooted

The disinvestment commission has recommended that the government divest a part of its holding in Electronics Corporation of India (ECIL) through a public offering.

The report also recommends against privatisation in Ennore Port Ltd (EPL) for three years. However, it has suggested strategic sale of the government's entire equity in North East Handicrafts and Handlooms Development Corporation (NEHHDC).

ECIL is wholly owned by the government and is under the administrative control of the Department of Atomic Energy. The company has been making profits for the past three years, with a net profit of Rs 53.25 crore in 2002-03.

The Commission has said the government should contemplate any further disinvestment following the public offer only after a period of five years.

The company has 5,481 employees on its rolls and its paid-up capital as on March 31, 2003 was Rs 129.8 crore.

In its 23rd report submitted to the government, the Commission has suggested the company should exit high-volume, low-technology business and implement key recommendations of the Naresh Chandra Committee on "Audit and Corporate Governance".

Ennore Port Ltd was incorporated in 1999 and began commercial operations in June, 2001. The company is under the administrative control of the shipping ministry where the government holds a stake of 66.7 per cent and the Chennai Port Trust (ChPT) holds 33.3 per cent.

The Commission has said in its report that as only two of the 22 berths of Ennore port have become functional till date, the government should privatise it only after three years by when operations reach a critical size.

Amendments to the Major Port Trust Amendment Bill, 2001 will also have been be passed by then.

The report recommends the strategic sale of 51 per cent and sale of balance stake five years thereafter. It also says that the government should buy Chennai Port's stake in EPL.

Losses over several years have completely eroded NEHHD's net worth. It had a net worth of Rs 12.9 crore on 31 October, 2003.

The Commission has suggested the government should sell its holding of 100 per cent in the company to a strategic partner through competitive bidding. It further says if no bidder is found, the corporation should be wound up.

The report

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• Electronics Corp: Sell part of the govt's holding through a public offering
• Ennore Port: Privatise only after three years
• NEHHDC: Sell the govt's entire equity