Dow Chemicals (US) has pulled out of the race for the 26% stake in Indian Petrochemicals Limited. This was reported by a leading financial daily.
IPCL (FY99 Net Sales: Rs 31.1 bn) is India's second largest integrated manufacturer of polymers, fibre and fibre intermediaries and chemical products. It has two integrated petrochemical complexes and is in the process of setting up a third one.
The decision to pull out of the bidding process by Dow will definitely reduce the enthusiasm surrounding the entire process. Now, only three bidders remain in the fray – Reliance, Mitsubishi and Soros-Chatterjee-Indian Oil joint venture. Although no reason has been forwarded by the company for withdrawing from the process, concerned authorities attribute it to Dow Chemical's recent acquisition of Union Carbide.
The reduced number of bidders may be a cause of concern from two points of view. Firstly, there is a possibility of a delay in divestment if more bidders were to withdraw for unforeseen reasons. Secondly, the government might not get a right price for its stake in case the competition is limited. However, with Reliance and IOC, the two domestic giants, still in the fray, there is little reason to believe that the bidding process will be anything short of exciting.
Analysts have rated the stock as a 'BUY' on account of the turnaround in the petrochemicals cycle. Also the proposed handover of the management to a private concern has supported the 'BUY' rating.
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