Indian Govt Ready to Divest TCIL

India’s Department of Disinvestment has begun the process of completely divesting the government's stake in the Tyre Corporation of India (TCIL), the first outright sale of a public sector company to take place in India since 2003-04. The Economic Times comments that, should all go to plan, the divestment should be complete this year. Commenting to the financial daily, the chairman of the Board for Reconstruction of Public Sector Enterprises, Dr. Nitish Sengupta, said that TCIL’s balance sheets have now “been cleaned up” and the board has advised the disinvestment department “to proceed with their sale on an ongoing concern basis.” Sengupta added that many bidders may find the tyre enterprise attractive on the basis of its land assets alone.

Parliamentary clearance was given for the sale of TCIL in 2007 and while the sale process will begin “soon” the exact timing has not been announced and it may be delayed until upcoming elections in West Bengal, where the company is headquartered, are held. “We will initiate the process for Tyre Corporation’s sale after a formal approval from finance minister Pranab Mukherjee and then, the cabinet,” a senior official in the disinvestment department told The Economic Times on conditions of anonymity.

Tyre Corporation of India came under government control in 1984, when Inchek Tyres and National Rubber Manufacturers were nationalised in order to protect 4,000 jobs and ensure a secure supply of vehicle tyres to state transport utilities, government departments and defence. However in 1992 TCIL was designated a ‘sick’ company as the company had accumulated losses exceeding its net worth, and it was referred to India’s Board for Industrial and Financial Restructuring. The tyre maker today has an installed capacity of 23,310 tonnes but just nine per cent of this was utilised in 2009-10.