The Karnataka government has invited bids from the private sector to acquire its 51 per cent stake in the loss-making Mysore Acetate and Chemicals Co Ltd. "We have retained SBI Caps as the merchant banker to conduct the deal," said highly placed official of industries department.
Talking to Business Standard, the official said: "We hope to put the deal through within a few weeks if offers are good."
Mysore Acetat has an equity base of Rs 6.48 crore of which the state government holds 65.43 per cent with an investment of Rs 4.26 crore, while state PSUs hold shares worth Rs 30 lakh. Financial Institutions hold equity worth Rs 90.80 lakh and other Rs 1.01 crore.
The company had as on March 1995 a total liability of Rs 6.17 crore and had an accumulated losses of Rs 3.33 crore. Provisional figures for last year showed a loss of Rs 1.25 crore on a turnover of Rs 23 crore, according to company officials. The company has an employee strength of 631.
The unit was started in 1963 primarily to utilise the demand that was expected to come from Hindustan Photo films Ltd at Ooty and the basic raw material was available with Mysore Sugar Mills Ltd.
The unit had an installed capacity to make 3300 tpa cellulose tri acetate, 3000 tpa cellulose acetate moulding granules, 5100 tpa acetic anhydride and four other allied products. According to officials in Karnataka State Bureau of Public Enterprises (KSBPE) the woes of the company started with Hindustan Photo Films Ltd in Ooty falling into bad times. Besides the market for its products being highly competitive and price sensitive the margins started getting squeezed.
The survival of the company became difficult following the union government's decision to de-control molasses which jacked up the cost of raw material acetic acid to abnormal levels.
Sensing the futility of retaining control over such a price-sensitive product manufacturing unit, the state decided to divest controlling stake if not its entire holding. In the meantime, the company management along with bankers has prepared a revival plan entailing infusion of large amount of funds and latest technology. The government decided to handover the reigns of the company and the revival plan to new owner once the process was through.
In fact, in the mid-eighties, the state government led by Ramakrishna Hegde had almost finalised a deal to sell state's entire stake to the Mafatlal group for a consideration of Rs 7 crore.
However, following a furore that the sale proposal created in the state legislature, the Hegde government called off the deal