Battle For IPCL Hots Up As Reliance, PSUs Up The Ante

Mumbai/New Delhi, April 17: | Updated: Apr 18 2002, 05:30am hrs
The battle between Reliance Industries Ltd and the state-run Indian Oil Corporation for Indian Petrochemicals Corporation Ltd (IPCL) hotted up on Wednesday, with indications emanating from Reliances side that it would insist on caveats even if IOC was to bid alone, and would have serious reservations if Oil and Natural Gas Corporation (ONGC) teamed up with IOC for the bid.

On the other hand, both IOC and ONGC continued to stand firm on their postures, saying they were in talks for an alliance and that their business strategies could not be dictated by Reliance or any other bidder.

Naik Not Averse To IOC-ONGC Pact For IPCL Bid
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Our Infrastructure Bureau
Our Infrastructure Bureau
New Delhi, April 17: Petroleum minister Ram Naik on Wednesday favoured allowing ONGC to bid along with IOC for acquiring government stake in Indian Petrochemicals Corporation Limited.   New Delhi, April 17: Despite the recent upsurge in international crude oil prices, which will put tremendous pressure on the bottomlines of national oil companies...
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On another front, the third bidder for IPCL, private sector detergents major Nirma Ltd, has decided to go ahead with the bid even if IOC joined hands with ONGC. Highly placed Nirma group sources told The Financial Express on Wednesday evening that they had evaluated the entire scenario and would go ahead with their bid for IPCL.

We will go ahead with our bid based on our perception of the valuation of the company, the sources said, adding that their bid would not be influenced by the possibility of IOC tying up with ONGC. The government is to divest 26 per cent in IPCL, and the financial bids are to be submitted on April 29.

While Reliance is believed to still be miffed at the possibility of the IOC-ONGC tie-up, the signals are that even if IOC were to go it alone, Reliance would not want it to be allowed to raise funds using the sovereign guarantee.

Also, Reliance wants the IOC bid to be based on factors like return on equity (ROE) and such other financial parameters. They (Reliance) would not want a situation where just because IOC is government owned it can go ahead with any amount of aggressive bidding. Besides, IOC should not be raising funds using the sovereign guarantee. This is against the concept of a level-playing field, since private sector companies are answerable to shareholders and also do not enjoy sovereign guarantees, sources tracking the developments said, though Reliance had no official comment to make on the issue.

But neither IOC nor ONGC are in a mood to relent on the issue. IOC officials say they can always go ahead with joining hands with ONGC even after the bids are put in. Besides, they said that even when RIL and Reliance Petroleum merged, IOC could have created a big issue out of the resultant financial muscle of the merged entity, but they had not done so.