The government?s delay in ratifying Andrew Yule board?s decision of not divesting its 26.33% stake in Tide Water Oil Co (India) is pushing back Tide Water?s plan for a follow-on public offer, much needed to fund its diversification, including venturing into refining business.
The chairman of state-owned Andrew Yule, Kallol Datta, on Friday said the Andrew Yule board has already cleared the decision of not divesting its 26% stake in Tide Water Oil and its decision was lying with the Heavy Industries ministry for ratification.
The government earlier directed Andrew Yule to divest a combined stake of 42% it held (Andrew Yule held 26.33%) along with the clutch of financial institutions in its arms but it decided to suspend the government direction since the primary aim of disinvestment?to repay government loans worth Rs 62.26 crore? was achieved after selling its stakes in DPSC and Phoenix Yule.
?Since the disinvestment of Andrew Yule?s holding in Tide Water was a Cabinet decision, the government needs to formally accept the proposal to drop the process. Unless that happens, we can?t dilute the parent?s 26.33% stake though an FPO,” an official said. Tide Water, currently the highest revenue earner of Andrew Yule, has planned to raise its lubricant making capacity from 92,500 kilo litre per annum at present to 1 million kilo litre per annum by 2011-2012. This capacity addition would require Rs 10 crore, while Rs 40 crore has already been spent in setting up two new plants, Datta said.