Calcutta, Aug. 23: The Bengal cabinet today approved a proposal to divest the government's equity in Metro Dairy.

"As we were holding 47 per cent equity in the company, we did not have a say in its running. In such a situation, we decided to move out of the company to let it run efficiently by a private partner," a minister said.

The Telegraph had reported on Tuesday that the state cabinet was set to consider a proposal of divesting its 47 per cent equity in Metro Dairy. The government had twice floated e-auction tenders seeking interested buyers of its shares, but the only bidder was Keventer Agro, which already held 53 per cent stake in the company.

The minister said the government would consider similar divestment proposals in the future in companies in which it didn't have majority shares.

"If we cannot control the management of a company, we should not be involved in their operations. But this would not be a general policy. We will take each case separately," the minister explained.

The government had set the base price for its equity at Rs 85.43 crore, while Keventer offered Rs 85.5 crore. Keventer's bid stood as nobody else came forward, perhaps knowing that it would be tough to outsmart the already entrenched player.

"We had decided to walk out of the management of the company and so accepted the rate. I think it is a gain for us as the state government had invested only Rs 2 crore in 1991, when the company was formed in the PPP model," another Trinamul minister said.

Keventer MD Mayank Jalan said he was waiting for an official communication from the state.

Metro Dairy was set up in 1991 as a tripartite venture between the West Bengal Milk Producers Federations Ltd (Benmilk), Keventer Agro and the National Dairy Development Board (NDDB). Later, NDDB sold its 10 per cent stake to Keventer.

Metro Dairy has been steadily losing market share - its sales fell from 3.5 lakh litres a day to 2.2 lakh litres - to Amul, a relatively new entrant in Calcutta and the Bengal market.

Industry sources said Metro Dairy might diversify into other categories such as tetra-packed milk, curds, flavoured yogurt and milkshakes.