New Delhi, Dec. 28: The government’s decision to sell off a 61.8 per cent stake in Calcutta-based Balmer Lawrie as a single entity on an as-is-where-is basis has sparked a major controversy.
At the Cabinet meeting itself petroleum minister Ram Naik objected to the move, making it clear that this would deter serious bidders and could lead to a situation where dubious business interests acquire the 135-year-old company and strip its assets.
Naik’s objections, which were ultimately rejected by the Cabinet Committee on Disinvestment, were echoed by a few other members who warned that it was the government’s job to find “good partners” for the PSU firms put up for divestment. The aim of the disinvestment exercise could not be just to earn money but rather “to unleash the true potential of the PSUs”, they said.
The argument advanced by the petroleum ministry is that the company should have been unbundled into four different business units — leather chemicals, tea, travel and containers. This would have attracted leaders in these businesses to bid for various segments of Balmer Lawrie.
But by choosing to go ahead with a block sale, the ministry feels, the government is inviting trouble. They reckon that a company with stated reserves of Rs 136 crore and property assets worth far more would be a plum choice for a trader interested in booking quick re-sale profits.
The firms that have shown interest in the selloff include the likes of Ahmedabad-based Adani group, Calcutta-based Srei Finance and Zim Lines.
Balmer Lawrie, which last year recorded a turnover of Rs. 769.6 crore, had in fact proposed to unbundle its business interests in a letter of intent posted on the internet, before the disinvestment ministry stepped in.
The company had invited proposals for strategic alliances from Indian and overseas firms in four areas — leather chemicals, tea blending and exports, tours, and container freight stations.
Balmer Lawrie wanted a strategic partner for the Rs 175-crore leather chemicals business. The partner would provide state-of-the-art technological inputs for the development of a comprehensive basket of products in sophisticated fat liquors, synthetic tanning agents, beam house performance chemicals and leather finishes.
Similarly, in the field of tea blending and exports, it was “looking for a strategic alliance that would provide backward linkages with tea producer, forward linkages with overseas buyers, leverage the marketing of its branded tea in the domestic market and integrate with global supply chain through extensive marketing network.”