BPCL Asset Valuer Asked to Submit Valuation of Company in 50 Days

Once the valuation is completed, it will trigger invitation of price bids from potential acquirers.

Photo used for representational purposes.

(Photo: Reuters)

In a partial indication of timelines for privatisation of India's second biggest state oil refiner, the government has set a 50-day deadline for an outside 'asset valuer' to carry out the valuation of all assets of Bharat Petroleum Corp Ltd (BPCL), a process once completed will trigger invitation of price bids from potential acquirers.

The Cabinet Committee on Economic Affairs (CCEA) had on 20 November given a go-ahead for sale of government's entire stake in BPCL, Shipping Corporation of India Ltd (SCI), power generator THDC India Ltd (THDCIL) and North Eastern Electric Power Corp Ltd (NEEPCO) to a strategic investor along with management control.

It had also approved sale of 30.8 percent out of its 54.8 percent interest in Container Corp of India Ltd (Concor).

The stake sale will follow a two-stage process of first inviting expression of interest (EoI) from potential bidders who will after due diligence will be asked to submit price bids in the second part, officials said.

In the run-up to the decision, the Department of Investment and Public Asset Management (DIPAM) -- the department in finance ministry responsible for disinvestment in PSUs -- had on 11 October issued advertisements seeking transaction and legal advisors as well as asset valuers for the stake sale but masked the identity of the state-owned firm.

It merely said that they operate under administrative control of the Ministry of Petroleum and Natural Gas, or Ministry of Power, or Ministry of Shipping or Ministry of Railways.

Soon after the Cabinet approval, DIPAM unmasked the identity of disinvestment targets by issuing 'corrigendum' to the 11 October Request for Proposals (RFPs).

The RFP wanted Asset Valuer to "identify, describe and list all properties and assets, including intangibles" and value them according to "comparison method, income capitalisation, discounted cash flow, cost approach method or replacement valuation" method.

It wanted the asset valuer to complete its “valuation report within a period of 50 days from the date of issue of appointment letter “ in case of BPCL, according to RFP.

Last day for submission of bids for appointment as asset valuer was 4 November.

Official said DIPAM may invite EoI from potential bidders pending receipt of valuation report but price bids will come in only after getting the valuation report.

A similar process will be followed for India's biggest shipping line SCI and country's largest onland cargo mover Concor, they said.

THDCIL and NEEPCO will be sold to state-owned NTPC Ltd based on valuation report of DIPAM advisers.

Three separate sets of advisors will be appointed for each of the firms for conducting the transaction, preparing legal documents and doing asset valuation.

DIPAM in the corrigendum said: "Strategic disinvestment of state of Government of India in a CPSE may be read as 'Strategic disinvestment of Government of India shareholding of 53.29 percent in BPCL (except its equity shareholding of 61.65 percent in Numaligarh Refinery Ltd (NRL) and management control thereon) along with transfer of management control to a strategic buyer."

The 61.65 percent of BPCL shareholding in NRL along with management control will be transferred to “a central public sector enterprise (CPSE) operating in the oil and gas sector”.

It said the government will see 30.8 percent out of 54.8 percent stake in Concor to a strategic buyer along with management control and all of government holding in SCI.