Describing the deal as a "trend setter", minister of state for industry Sukhbir Singh Badal said that Phoenix had paid the money to Andrew Yule, and the new company-Pheonix Yule Pvt Ltd-came into existence from February 1.Under the deal, finalised on the advice of financial consultant ICICI Ltd, the German company paid DM 0.35 million (approximately Rs 0.83 lakh) to the parent company for "successful and timely completion of formalities for transfer," Badal, who pushed through the deal, said.

Badal said "workers' interests have been fully protected" even in the privatisation process of the loss-making belting division, and added that money received from the deal was being deployed by Andrew Yule for its restructuring.

"We will achieve the next such deal by June this year when we sell majority stake in the tractor division of HMT Ltd, and negotiationsare at an advanced stage in the case of Instrumentaion Ltd," Badal said.

The cabinet had approved the hiving off of the belting division for joint venture with Government equity at a minority 26 per cent in August last year.The Government has identified 22 other PSUs for converting them into joint ventures, including Tyre Corporation of India, Scooters India Ltd and Cement Corporation of India, Badal said.

"We have appointed financial consultants for 16 companies, and three more are underway," he said, adding the companies are being monitored on a regular basis.

The privatisation of the belting division is a "big achievement for us" as the new company will now get the financial, technological and marketing skills, Badal said.

The financial health of the division has been deteriorating owing to a lack of orders and underutilisation of capacity, and the move is expected to improve profitability, the minister said.

The division, which employs around 600 workers, posted a net loss of 10.26 crore of thenet profit of Rs 1.47 crore posted by Andrew Yule in 1996-97.As part of its efforts to prop up Andrew Yule, the Government injected Rs 44 crore last year as a one-time settlement to banks.

Badal said that Andrew Yule's success would give a signal to prospective investors regarding the "Government's policy of strengthening the potentially viable PSUs through joint ventures".

In Andrew Yule's case, the Government engaged ICICI and I-Sec initially for locating suitable joint-venture partners through the international competitive bidding process.

As this route did not yield results, the Government negotiated directly with the parties and clinched the deal, Badal said. Besides Andrew Yule and HMT, the Government has given in-principle approval to privatise Bharat Heavy Plates & Vessels, Bharat Leather Corporation, Bharat Pumps & Compressors, Bridge & Roof Company, Cement Corporation of India, Engineering Projects, Hindustan Cables, HMT Ltd, HMT Bearings, and Hindustan Paper Corporation.

The other companiesare Hindustan Photo Films, Hindustan Salts, Instrumentation Ltd, Lagan Jute Machinery, Mandya National Paper Mills, Nepa Ltd, National Industrial Development Corporation, Praga Tools, Scooters India, Sambhar Salts, Tungabhadra Steel Products, and Tyre Corporation of India.