Rarely has a disinvestment decision been so keenly followed as that of Haldia Petrochemicals.

After much dilly-dally, the West Bengal Government is expected to announce the decision on IndianOil’s bid for the State’s 40 per cent shareholding in sick Haldia Petrochemicals today. A meeting of the Group of Ministers is currently on to take a final view on the tender.

The delay on the part of the State to declare reserve price has only added to the confusion.

Contrary to the usual practice of announcing the reserve price before the bidding round, the West Bengal Government decided to work it out after the bidding was through. And, that created confusion about the Government’s revenue expectations vis-à-vis the fate of IOC’s bid.

While sections in the Government cite a 2005 price quote of Rs 28.20 a share, of Rs 10 face value each, by the private partner Purnendu Chatterjee; consultants and companies who carried out due diligence of HPL in the run up to Monday’s bidding feel the Government should be lucky to get any price above face value of shares.

“The fair value of the company by way of discounted cash flow, market multiplier or EBIDTA multiplier should not cross Rs 5 a share. Add to that the huge legal risks in view of legal disputes over ownership of at least 9 per cent shares (out of 40 per cent), the company’s shares should not sell over the face value,” a source said.

Sources in IndianOil also negate possibilities of paying in the range of Rs 28 a share. “It is an unrealistic price,” a source said.

But what if the Government sets the reserve price higher than IOC’s quote. Those in the know feel it would trigger a controversy.

Since there was only one bidder and the reserve price was set after the bidding, it is bound to trigger a controversy, they say.

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