The divestment commission on Thursday recommended privatisation of Kolkata-based conglomerate Andrew Yule and Co and favoured offering 40 per cent stake in Indian Vaccine Corporation to IPCL.

In its 24th report submitted recently to the government, the commission categorised AYCL as non-strategic arguing there was no rationale for the company to continue as a public sector undertaking.

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The report said the government should sell its entire equity amounting to 93 per cent in the multi-product, multi-location company to a strategic partner and provide for restructuring in consultation with the prospective bidders.

AYCL, whose history dates back to the British Raj, was set up in 1863 before becoming a PSU in 1979. It currently acts as a group company holding stake in a number of companies including Hooghly Printing and Tide Water.

The panel also favoured divestment of equity in AYCL group companies and asked the government to implement transfer of 26 per cent stake in Descon to AYCL.

It said in case a suitable partner could not be found, then the sale should be undertaken on a divisional basis after demerger of the units.

AYCL is currently organised into four units including tea and electrical divisions with most of the operations in losses. The company has been posting losses for the past three years and was referred to Board for Industrial and Financial Reconstruction. The scrip trades on Kolkata and Bombay stock exchanges.

In the case of Indian Vaccine Corporation, the commission favoured offering 40 per cent government equity to promoters IPCL with the right of acceptance and refusal.

The commission, however, asked the government to retain the remaining 26 per cent till IVCOL develops into a full-fledged company.

In case IPCL refuses to buy the stake, then government should invite fresh bids for the same.

IVCOL was set up in 1989 for making human vaccines for combating polio with 66 per cent of its Rs 18 crore (Rs 180 million) paid up capital being subscribed to by government and remainder by IPCL.

In another case of Educational Consultants, the Commission recommended retaining the unit as a PSU for some more time with a review being undertaken after a period of three years to assess the need for privatisation.

It asked the company to widen its client base and reduce dependence on government contracts while withdrawing a portion of its cash surplus.