State-Owned Hindustan Organic Chemicals Mulling To Buy Out Subsidiary HFL
HFL had invited applications for an asset valuer, transaction adviser and legal adviser for the sale.
State-owned Hindustan Organic Chemicals Ltd. is likely to buy out its loss-making subsidiary Hindustan Fluorocarbons Ltd., people with direct knowledge of the matter told BloombergQuint.
HFL is 56.4 percent owned by its parent, while the remaining stake is held by the Andhra Pradesh Industrial Development Corporation, banks, financial institutions and individuals, according to its filings.
The government had given its in-principle approval to sell its stake in HFL held through HOCL. Instead, HOCL is planning to bid to acquire the remaining stake in the subsidiary, while the Department of Investment and Public Asset Management is working out the pricing, people quoted above said. Discussions are at a premature stage and it’s not certain that the transaction would take place, they added.
Prime Minister Narendra Modi’s government has been looking to either privatise or divest stake in loss-making entities. Although the initial proposal was to divest stake in HFL as well, the strategic divestment guidelines allow both private and public sector companies to take part in the sale.
Taking into consideration all relevant factors including monopoly issues, the government can always impose reasonable restrictions, in specific cases, in public and national interest, the guidance note released by DIPAM in January said.
HOCL Chairman SD Bhide could not be reached on the contact number listed on the company’s website.
HFL had invited applications for an asset valuer, transaction adviser and legal adviser for the sale.
The company reported a net loss of Rs 4.8 crore in the year through March 2017. According to HOCL’s annual report for 2015-16, HFL had incurred losses in financial years 2013-14, 2014-15 and 2015-16 as well. Based on its latest audited balance sheet as on March 31, 2016, its net worth is negative, the report said.
It has since remained in poor health as it reported a net loss of Rs 4.8 crore in the year through March 2017. It posted a loss of Rs 1.04 crore in April-June 2017, but turned profitable in the next quarter only to again report a loss in October-December.