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Videcon withdraws from IA bid; to decide shortly on VSNL

Without waiting for a show cause notice on its eligibility for a stake in PSUs, Videocon on Tuesday said it has withdrawn from the race for acquiring stake in Indian Airlines and would take a decision on its bid for Videsh Sanchar Nigam by Wednesday.

"We have written to the government informing about our decision to withdraw from bidding for Indian Airlines," Videocon chief V N Dhoot told PTI from Bombay on telephone.

Meanwhile, officials in the divestment ministry said that show cause notices would be issued in a day or two to the tainted companies to ask why they should not be disqualified from the divestment process in accordance with the guidelines announced earlier this month.

When contacted, divestment secretary Pradeep Baijal confirmed the withdrawal of Videocon's bid for Indian Airlines, where Hindujas were the other bidder for the 26 per cent government stake but did not elaborate on the reasons.

Dhoot, however, said that he had not yet received any communication from the government on the status of his company's bid for stake in PSUs.

"We will decide on our position vis-a-vis VSNL by Wednesday," Dhoot said adding that he was unaware about the provisions of the show cause notice under the guidelines.

"We decided to withdraw from Indian Airlines due to inordinate delays in the divestment process in the Airline," Dhoot said.

Meanwhile, the government is expected to send show cause notices by Wednesday to Videocon, Hindujas, who bid for both Air India and Indian Airlines, and Sterlite Industries which is in the race for Hindustan Copper, Hindustan Zinc and Hindustan Cables.

While Hindujas are likely to be given the notice on security considerations in the wake of they being chargesheeted in the Bofors case, the other two companies are being asked to explain why they should be considered after the Sebi order barring them from accessing the capital market on charges of share price manipulation.

The government would have to start the divestment process all over again for Indian Airlines in case of an adverse verdict against both the Hindujas and Videocon, official sources said.

Even Credit Suisse First Boston is expected to be slapped with a show cause notice for its continuation as the global advisor for privatisation of VSNL.

Meanwhile, Bharati-Singapore Telecom combine announced its decision on Monday to withdraw from the race to become strategic partner in VSNL by picking up 25 per cent government equity.

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