Six major firms vie for Balmer Lawrie stake

Mumbai: The Jindals-promoted Maharashtra Seamless, Aban Lloyd, Seri International Finance, ABG Heavy Industries, the Gujarat-based Adani group and Orissa Cements are the six major companies in the race to acquire the government's 61-per cent stake in Balmer Lawrie Company (BLC). Around 16 companies are participating in the bid.

Petroleum ministry sources say the government has received an overwhelming response for BLC's divestment. “Out of the 16 bidders, the divestment ministry will shortlist around 14 final bidders by the end of this month. Once the process is over, the bidders can start the due diligence of the company, following which the financial bids will be called for.“

As against the earlier decision, the sources say the government has now decided to sell the company without any split. The centre initially had plans to hive off BLC's four business units into separate companies for which strategic partners were to be roped in.

The four businesses were travels and tours, chemicals and container freight stations besides tea blending and exports. The government's move is based on State Bank of India Capital Markets' advise that the government should divest its 61-per cent stake in BLC without splitting it into different units.

The government's merchant banker had advised that though BLC functions with different unrelated business units, splitting the company into separate units for divestment purpose might require considerable time, which could fail to attract prospective bidders.

The sources add that splitting the company into different units may reduce the company's total net worth. “The turnover of some BLC divisions is too low to convert them into separate units and these units may not attract any bidders. Besides, the bidding process will also be complicated if the company splits into different units.“

BLC has business interests in greases, lubricants, speciality chemicals, barrels, liquefied petroleum gas cylinders, freight containers, industrial packaging, travel and tourism and tea exports. Out of these, packaging, cargo chemicals and travel and tourism performed well, while the grease, lubricants and tea business of the company fared poorly.

The government has already shifted its 61per cent BLC stake to a newly-floated company called Balmer Lawrie Investment Company. Formerly BLC was a subsidiary of IBP. The company was hived off when the latter was taken over by Indian Oil Corporation early this year.