New Delhi, July 1: The finance ministry has disfavoured a move by the disinvestment ministry to sell off Calcutta-based Andrew Yule as a single going concern as there will be few serious bidders for the 140-year-old company with diverse interests ranging from engineering to electricals and tea.
Instead, the ministry’s expenditure department, which sits in on the inter-ministerial group that decides on divestment strategy, feels Andrew Yule should be broken into three separate firms and each of them dealt with separately.
“Very few top corporate entities will be interested in a diversified firm like this. Tata Tea, Duncans and other major players in the tea market would not be keen on taking on an engineering or electrical division. In fact, it is doubtful whether tea companies would like to buy even tea gardens right now as the market is going through a downswing. Engineering giants like L&T or Bhel would likewise not be interested in the tea business; hence our formulation,” explained top officials.
They said the department feels that as much of what the electrical division produces —switchgear, transformers, voltage regulators, digital microwave radio, fibre optic — is produced by many other firms at far more competitive costs, it makes sense to shut down the divisions handling these works.
The engineering division, which makes machinery for tea processing, industrial fans, air pollution equipment among other things, may be merged with another PSU which specialises in engineering products but does not have facilities in these areas.
“We are thinking of Bhel but of course this is something which the concerned ministries and the PSUs themselves will have to sort out after strategic comparative studies,” top officials said.
It is Yule’s tea division that has attracted most attention as it is the company’s largest asset. There are in all 15 tea gardens spread over Darjeeling, Dooars and Assam. The more than 100-year-old tea business earns the lion’s share of its nearly Rs 600 crore turnover.
Officials feel that what with a downswing in the market for tea gardens, right now would be an “inappropriate” to put the division up for sale. Instead, the recommendation is for this division to be sold off at a later stage when the tea market improves.
“We in fact feel that even when the selloff is conducted, it should be done by auctioning off each garden separately as this is likely to result in a higher realisation,” said officials.
By waiting sometime and spinning off the engineering and electrical businesses, analysts also feel that the company would be in a better position to report profits. It has reported losses for the last three years —Rs 25.7 crore in 200-01, Rs 24.7 crore in 2001-02 and Rs 65.4 crore in 2002-03. Till 1999-2000, it was a highly profitable firm. In fact, in 1997-98, it had reported a profit of Rs 34.5 crore on a turnover of Rs 706.6 crore.