Ignoring assets & valuation, govt disinvested PACL: RTI reply
Vijay C Roy
Chandigarh, May 18
The disinvestment of Punjab Alkalies and Chemicals Limited (PACL) is a classic case of ignoring basic principles of strategic disinvestment by the state government. The latter not only ignored the asset and business valuation of the profit-making company, but also the expenditure of over Rs 110 crore undertaken by the PACL just before the disinvestment and the accrued benefits amounting to over Rs 200 crore, according to annual report 2019-20 of the company.
Key strengths of PACL
- One of the largest caustic soda manufacturers in the northern region.
- Capacity utilisation higher than industry average during the last 5 years.
- A modernised Unit-II after replacing the old electrolysers with the latest technology.
- Under Industrial and Business Development Policy, 2017, the PACL was eligible for 100% exemption from electricity duty for 10 years and 25% of net GST paid for first seven years.
The state government sold off 100 per cent of its shareholding in the PACL (rechristened as Primo Chemicals Ltd in December 2022) in September 2020 for a meagre Rs 40.98 crore.
In response to an RTI reply sought by The Tribune, the Punjab State Industrial Development Corporation Ltd (PSIDC), stated that the council of ministers in a meeting dated September 16, 2019, decided to disinvest 33.49 per cent stake of the PSIDC. After the decision, the Directorate of Public Enterprises and Disinvestment (DPED) had initiated the disinvestment process and appointed the transaction advisor for inviting expression of interest. However, the transaction adviser (Resurgent India) failed to get any positive response on the expression of interest till September 14, 2020, the RTI reply stated.
The company undertook capital investment just before the government decided to dilute its stake. According to annual report 2019-20 of the company, the PACL invested Rs 116 crore (approx) from its internal accruals towards modernisation of its plant. “As a result the power consumption will be reduced to 2,350 units per MT from 2,745 units per MT. The company will be sanctioned fiscal incentives under the Industrial and Business Development Policy, 2017, of Punjab. It will get exemption in electricity duty over 10 years subject to a cap of Rs 120 crore and reimbursement of 25 per cent of net GST over a period of seven years, subject to a cap of Rs 120 crore which will further help in its sustainability,” the report states.
“While going for disinvestment, it seems that the state government completely ignored all these facts,” said sources.
In addition to this, the assets of the company were worth hundreds of crores, which includes 88.86 acres of factory land, a 772 sq yd plot in Sector 31 (Chandigarh), 2.67-acre housing colony and 8.61-acre new colony, besides plant and machinery in Ropar. Further, the company registered net profit of Rs 55.86 crore in 2018-19 and Rs 8.80 crore in 2019-20.
Prior to this, the DPED had made four attempts for disinvestments of PSIDC’s equity stake in the PACL, but failed. “However, having failed to attract any buyer this time, the state government was in such a hurry that it ignored the basic fundamental of disinvestment and diluted its stake, said sources.
