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Ministries at loggerheads over Balmer Lawrie sale
April 10, 2003 21:26 IST
Differences have once again surfaced between the ministries of divestment and petroleum over the sale of government equity in public sector oil company Balmer Lawrie.
While the ministry of divestment is in favour of a two-year lock in period for the strategic investor buying 61.8 per cent government equity in Balmer Lawrie, the petroleum ministry wants the conventional three-year lock-in period, highly placed sources said in New Delhi.
The differences emerged at the meeting of the Core Group of Secretaries on Divestment that met on Thursday to freeze the draft transaction documents for the sale.
Sources said the petroleum ministry believed that the strategic partner may want to strip the assets of diversified Balmer Lawrie as selling individual businesses would fetch it a lot more than the bid price.
Thirteen companies in fray for the amalgamated Balmer Lawrie include ABG Heavy Industries, Adani Group, BMW Industries, Orissa Cements, Patton, Gujarat Glass, Srei International Finance, Utam Galvanising, Techno Craft, Sound Craft, Fedders Lloyd, Zim Lines and Maharashtra Seamless.
Employees of Balmer Lawrie too fear that the buyer of amalgamated firm may sell units individually for huge profits, quite similar to the one witnessed in the case Centaur Hotel, where Batra Hospitality made a neat profit of Rs 32 crore (Rs 320 million).
Earlier, the petroleum ministry had proposed to hive-off Balmer Lawrie's CFS, travel and tours, leather, chemical, tea blending and exports divisions into separate subsidiaries before divesting the company, but was overruled by MoD.
The finance ministry too had supported the petroleum ministry's proposal for hiving-off the non-core businesses of CFS, travel and tours, leather, chemical and tea blending from Balmer Lawrie as by selling them separately the government would have realised better value.
The company in its present form would fetch not more than Rs 200 crore (Rs 2 billion), whereas if each unit is sold as a separate entity, it could raise more than Rs 500 crore (Rs 5 billion), the petroleum ministry believes.Interestingly, Balmer Lawrie maintains separate accounts for its different units and each of them was profit making. During 2001-02, travel and tours business made a profit of Rs 8.54 crore (Rs 85 milion), industrial packaging Rs 20.60 crore (Rs 206 million), logistics Rs 16.47 crore (Rs 164.7 million), and grease and lubricants Rs 7.25 crore (Rs 72.5 million) sources said.
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