The capital restructuring proposed, before IBP Company is put on the block, should reduce the Union government's stake in the company to 37 per cent from 59.58 per cent now. It should also give OIDB an equity holding of another 36 per cent, increasing the total government holding in the company to more than 73 per cent, in an oblique sort of way.

The OIDB board, has apparently remained non-committal to the scheme, that should deprive it of guaranteed interest earnings in lieu of the less secured income from dividend.

The only all-out gainer in the bargain will be the debt-riddled IBP Company, which will end up with a tolerably clean slate. The company, earned a net profit of roughly Rs 40 crore, out of a turnover of close to Rs 6,500 crore last year. Its turnover in the previous year was Rs 5,670 crore, with a debt burden of Rs 1,246.68 crore. The IBP Company had a debt to equity ratio of 1.79:1 in 1998-99 and roughly the same that year.

The debt restructuring proposal involves converting Rs 250 crore of the company's Rs 560 crore of borrowings from the OIDB into 13 million shares. The exercise will increase the IBP Company's share capital to Rs 35.15 crore from Rs 22.15 crore now.

The Union government holds Rs 13.20 crore of that equity. The other shareholders in the company are IBP employees, who own 0.70 per cent of the company, banks and financial institutions with a total stake of 16.35 per cent and small shareholders. The public holding in IBP Company is 23.37 per cent and the current share price on Dalal Street is Rs 88 per share of Rs 10.

The debt restructuring proposal will obviously spruce up the IBP Company balance sheet. It is not clear at this juncture, though, how it will fit into the Union government's disinvestment plans.

Union petroleum minister Ram Naik has sought ``core sector'' status for the petroleum industry, which should make it mandatory for the Union government to retain a 51 per cent stake in the oil PSUs. IBP Company, which has business interests ranging from marketing petroleum products, chemicals and engineering, was never in the ``strategic list'' of the government, however.

The company does not have a refinery of its own and had from the beginning been clubbed with non-strategic units, like Engineers India Limited (EIL) and the Bongaigaon Refineries and Petrochemicals Ltd (BRPL).

The Disinvestment Commission had recommended that the Union government hand over 33.9 per cent of its 59.58 per cent stake in the company to a strategic partner. The recommendation has not yet been formally accepted by the petroleum ministry. In the meanwhile, the ministry has prepared a oil industry restructuring plan, involving alignment of smaller refineries with the industry giants. According to that restructuring proposal, BRPL and the Chennai Petroleum Corporation will become subsidiaries of Indian Oil Corporation. Cochin Refineries will become a subsidiary of BPCL. The plan does not include IBP Company.