Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
New twist to the IPCL disinvestment drama - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Mar 10, 2000

    New twist to the IPCL disinvestment drama

    The BJP affiliated labour union has proposed to pick up 30% of the government’s 59% equity in Indian Petrochemical Corporation (IPCL).

    IPCL is the second largest polymer company, has a strong distribution network and has added capacities (a 160,000 tonne polyethylene plant, a gas cracker unit and a mono-ethylene glycol plant at Gandhar) as well as import facilities in the last year.

    IPCL has really become a test case for the government’s disinvestment strategy. The government invited bids almost a year ago. Along with Indian petrochemical companies viz. Reliance and Haldia Petrochemicals, global majors such as Dupont, Mitsubishi, BP-Amoco submitted their bids. After the last date IOC entered the race in a tie-up with Haldia Petrochem.

    The delay in the disinvestment process led to withdrawal by all foreign companies. Indian Oil has been debarred since they submitted their bids after the due date. Thus the only bidders left are Reliance and Haldia Petro with the former most likely to bag the company.

    Meanwhile the delay in the disinvestment process has led to IPCL delaying the investment in four projects involving an outlay of Rs 27 bn, one of which was a naphtha cracker that would have allowed it to dramatically improve margins in the current year. Not only will the company now risk missing the upswing in the cycle but also faces the danger that if it decides to finally commit the money for expansion the capacities could come up at a totally inopportune time.

    Further, one cannot imagine the view that the bidders would take of an employee union taking a stake in the company and the impact it will have on the labour policies that the new management would like to implement. All in all tough times await the company in the near future.

    Market View:
    While IPCL’s business fundamentals remain weak, a change in management was expected to result in a sharp re-rating of the stock. This proposal could further delay the disinvestment process and delay the re-rating further.



    Equitymaster requests your view! Post a comment on "New twist to the IPCL disinvestment drama". Click here!


    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 03:37 PM


    • Track your investment in RELIANCE IND. with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts