Allies shift foot on Balco, advise caution

Allies shift foot on Balco, advise caution
PRESS TRUST OF INDIA

NEW DELHI, MAR 1: Three days after TDP vehemently attacked government on the Balco disinvesment in Rajya Sabha, the BJP ally did a sharp turnaround in the Lower House where the issue was discussed on Thursday under a motion that entails voting.

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The Shiv Sena, another major BJP ally, which had criticised the Centre with its Chief Bal Thackeray saying "the deal does not look alright", expressed apprehensions over it but said it would support the government while voting.

TDP member M V V S Murthy said his party was not pressing for setting up of a JPC on Balco issue as it had sought in Rajya Sabha. He said "there was no need for it.....as the deal seemed to be transparent."

Murthy said evaluation of Balco's assets at over Rs. 550 crore "appears to be right" and said its divestment would ensure reduction in cost of aluminium which was Rs. 63,000 per metric tonne compared with Rs. 38,000 tonne for Nalco.

He said the deal had ensured that there would be no retrenchment of workers which was a positive thing.

Shiv Sena member Ananth Geete demanded "total transparency" from the government but said it would support the government during the motion and not succumb to the Opposition "intention to split the NDA".

Referring to the Opposition allegation of corruption in Balco deal, he asked government to clarify any "misunderstandings" on the issue in National interest and take into consideration all aspects before taking a decision.

Meanwhile, the Government has dismissed in Lok Sabha Opposition charges of corruption in the Balco deal asserting it was a "perfect model of a transparent transaction where every decision was taken by a transparent bidding process".

"The Government has repeatedly stated if any body has doubts on the valuation, let them even today bring a higher value paying buyer," Law and Justice Minister Arun Jaitley said intervening in a discussion on the issue under rule 184 which entails voting.

He said the Government got the valuation of the company done on basis of internationally accepted models such as the book value, the discounted cash flow value and the value from comparative transaction.

Stating as a matter of abundant caution the Government also got asset valuation done, he said internationally the sale of running businesses were based on values of potential return, cash flows and prospects of the business.

"The value of a running business is not determined by politically-motivated speeches, it is determined by what the market is willing to pay," the Minister said.

Referring to Chattisgarh Chief Minister Ajit Jogi's opposition to the deal, he said officials of both Madhya Pradesh and Chattisgarh Governments had "fully cooperated" in the transaction.

``Why has he then somersaulted?,'' he asked.

Jaitley said the Government was getting 0.7 per cent dividend on an approximate investment of Rs. 1,000 crore in Balco which did not make any business sense when the rate of market borrowings was 11 per cent.

He said the interest of workers of Balco would be protected after the divesting of 51 per cent Government stake.

Citing statistics of the profitability of public sector units, Jaitley underlined the need for disinvestment in view of their poor performance to ensure a fair return on the money of the tax payer.

Accusing the Opposition of raising "non-issues" to block the deal, he made a scathing attack on the Congress and Left parties for terming the deal as "scandalous" and their opposition to the sale on the ground of Balco being a profit making PSU.

Stating that Disinvestment Commission set up by the United Front Government had recommended strategic sale of Air India and Balco way back in 1997, he pointed out while CPI was part of the Government, CPI-M And Congress were its outside supporters.

Taking exception to the Congress stand, he said the disinvestment process was started in 1991 when that party was in power and during its tenure it divested shares of 47 bluechip companies including VSNL, Gail, ONGC and Indian Oil.