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
outlookindia.com
-0001-11-30T00:00:00+05:53
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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