The government, which holds 90 per cent in Engineers India Ltd, has pocketed a tidy sum of Rs 280 crore (Rs 2.8 billion) through a special dividend before clearing the transaction documents for the strategic sale of 51 per cent in the company.

Also Read The Divestment Development

The total payout by the company is Rs 309 crore (Rs 3.09 billion). EIL had reserves of Rs 546 crore (Rs 5.46 billion).

The Cabinet Committee on Divestment, which met, also cleared the share purchase agreement for strategic sale in five other companies: State Trading Corporation (65.02 per cent), Balmer Lawrie (61.8 per cent), Tide Water Oil India Ltd (27.02 per cent), Hooghly Printing Company (100 per cent) and Hindustan Newsprint Ltd (74 per cent).

"The government has decided that the unearned increase in the value of land held by EIL in Delhi will not be paid for in its selloff process.

"We have gone against the recommendation of the Delhi Development Authority, as accounting for the value of the land will have resulted in a lower valuation of the company," Divestment Minister Arun Shourie said.

He said the important projects related to space and atomic energy that EIL was working on for various organisations, including the Defence Research and Development Organisation would be returned to the institutions before selloff.

The Intelligence Bureau and the Research and Analysis Wing had given a security clearance to the bidders for EIL.

Similarly, the CCD decided that unearned increase in the value of land of State Trading Corporation would also not be paid for before its sale.

The government will call for bids for STC after settling its dues of Rs 103 crore (Rs 1.03 billion). A 10 per cent stake has been earmarked for employees at a concessional price.

Post divestment, the government's stake in the company will be reduced to 16 per cent. Shourie said work on market offering of the government's residual stake in erstwhile public sector undertakings (IBP, IPCL, VSNL and CMC) was underway.