14 May, 2021

Let Them Have Cake

Showcase Modern Breads reports sick, but it's actually on the road to recovery

Let Them Have Cake
Barely hours before he left for Malaysia, Prime Minister Atal Behari Vajpayee had a brief meeting with representatives of the five big trade unions. The subject was—you guessed it—disinvestment. This time, the unions thought, they had a foolproof weapon in their arsenal: Modern Foods, the first psu off the block for a paltry Rs 105 crore, had found its way to the Board for Industrial and Financial Reconstruction (bifr) only a year after sell-off!

When the news broke a month ago, many had prepared to write an elegy to India's disinvestment efforts. Under the law, a bifr referral becomes inevitable once a company's accumulated losses cross half of its net worth. As outsiders tittered about the country managing to sell "only a bakery" in 10 years, Indians worried: if Modern Foods had turned sick, was India's first effort at psu privatisation a dismal failure?

Far from it. In fact, as Outlook discovered, the bakery may turn out to be a pioneering instance of privatisation success. For one, Hindustan Lever Ltd (hll), the new owners, reported Modern to the bifr because...

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