The GOI is showcasing the BALCO sale as an example of divestment detractors turning supporters. But the fact that the sale hiccupped at all, raises fresh concerns among private investors.

By Ashish Gupta

When the BALCO stalemate broke on May 8, an ecstatic Minister of Disinvestment, Arun Shourie, touted the denouement to the 67-day drama as a victory for the government's troubled disinvestment programme. Pradip Baijal, the department's Secretary, went a step ahead and declared that the BALCO settlement would in fact, put divestment plans on a roll.

That's more bravado than optimism. Far from celebrating the BALCO win, foreign and domestic investors are actually worried that a straightforward deal (the bidder, Sterlite, paid a premium for the majority stake) should have run aground the way it did. While the disinvestment process may not have been derailed permanently, it has suffered a set back by a few years. Points out Munesh Khanna, Partner and Head of Corporate Finance, Arthur Andersen; ''Strategic partners will now be much more careful in terms of documentation of the shareholders' agreement, and impose much more stringent conditions on the government. This is bound to have an adverse impact on the valuation process.''