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Balmer Lawrie is present in eight businesses, including greases and lubricants and refinery and oilfield services.
Balmer Lawrie is present in eight businesses, including greases and lubricants and refinery and oilfield services.

Balmer Lawrie’s eight units may be sold off separately

  • It will be the second PSU after BPCL under the oil ministry to be put on the block

State-run Balmer Lawrie & Co. Ltd’s eight businesses are likely to be sold off separately as part of the government’s disinvestment plan, said two people aware of the development.

SBI Capital Markets Ltd is advising the department of investment and public asset management (Dipam) in managing the sale of the 153-year-old firm. SBI Cap will shortly make a presentation to a committee headed by NITI Aayog CEO Amitabh Kant about the way ahead for the disinvestment.

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Balmer Lawrie is a Miniratna under the ministry of petroleum and natural gas and is present in eight businesses —travel and vacations, industrial packaging, greases and lubricants, leather chemicals, logistics, logistics infrastructure, logistics services, and refinery and oil field services.

Queries emailed to the spokespeople for the ministries of finance and petroleum and natural gas, and Dipam on Sunday evening remained unanswered till press time. A SBI Cap spokesperson declined to comment.

Finance minister Nirmala Sitharaman on 17 May announced a new public sector enterprise policy that will create a recharged disinvestment playbook. While articulating the way ahead for public sector enterprises, Sitharaman said that a distinction will be drawn on the basis of the strategic importance of such entities. Central public sector enterprises (CPSEs) that are not deemed strategic will be either merged or privatized, depending on market conditions.

“Given that Balmer Lawrie operates in disparate business areas that are unrelated, perhaps the best way forward may be to offload these eight strategic business units (SBUs) separately. SBI Cap will shortly make a presentation to a committee headed by NITI Aayog CEO Amitabh Kant about the way ahead for the Balmer Lawrie disinvestment," said the person cited above requesting anonymity.

Balmer Lawrie will be the second PSU after BPCL under the oil ministry to be put up for disinvestment. The government owns 59.67% of Balmer Lawrie, which employs 1,076 people.

The government has set a record 2.1 trillion divestment target that the finance ministry announced in the budget for 2020-21.

The government has so far raised around 12,225 crore through minority stake sales and the IPO of Mazagon Dock Shipbuilders Ltd. The government has also invited preliminary bids for a 26% strategic stake sale in BEML Ltd, which is engaged in manufacturing and supply of equipment for mining, construction, defence and rail projects.

The government has been missing its disinvestment targets as was the case in 2019-20 when the Centre missed the disinvestment target of 65,000 crore by 14,701 crore. This was on account of it deferring a number of offer for sale such as Coal India Ltd, Steel Authority of India Ltd, Power Finance Corp. Ltd and NMDC Ltd that were planned in the last financial year.

“Balmer Lawrie disinvestment exercise is going on. The consultant is working on that," said a top government official cited above who also did not want to be named.

A transaction adviser is yet to be appointed for the disinvestment.

Balmer Lawrie recorded a revenue of 1,612 crore during the financial year 2019-20 as compared to 1,854 crore registered in the financial year 2018-19. Its profit before tax fell to 232 crore in 2019-20 from 280 crore in the previous financial year.

The Economic Survey for 2019-20 said post-privatization, CPSEs performed better. It argued that privatization results in higher profitability, efficiency, competitiveness and professionalism.

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