With state-run oil marketing companies (OMCs) refusing to buy perpetually sick Biecco Lawrie Ltd, the Petroleum Ministry has decided to shut down the British-era company as it sees “no possibility” of its revival.
This is in line with consultant KPMG’s report which ruled out revival or part revival as a feasible option, but said that “the option of sale should be explored first and subsequent to this evaluation, closure option may be looked at”.
Ahead of the proposed closure, the ministry is seeking the approval of the Cabinet Committee of Economic Affairs for a budgetary support of Rs 153.26 crore as interest-free loan that would be subsequently converted into equity.
The money would be used to pay voluntary retirement package to its existing 275 employees, repay the Rs 24.56-crore loan it took from its majority shareholder Oil Industry Development Board (OIDB) and one-time settlement with lending banks.
Subscriber Only Stories
Biecco Lawrie, located in Kolkata, was established in 1919 as British India Electric Construction Company. It started as a tea garden machine manufacturer and made shell cases, food containers, camouflage sets for military during World War II. In 1932, it produced low priced fans for masses. Now, it has a lube oil blending plant with annual capacity of 12,000 kilolitres. It makes switchgears as well as undertakes small power distribution projects, markets kerosene, paraffin wax, bitumen and furnace oil. However, more than decade ago, it started suffering losses which presently stand at Rs 153.95 crore. Its net worth turned negative and was Rs 78.88 crore at the end of fiscal 2017-18.
In March 2013, the Board for Reconstruction of Public Sector Enterprises recommended its closure since it had “insignificant market share and could not turned around”. Despite that, the government asked OIDB to extend Rs 12 crore as special loan assistance to Biecco Lawrie.
In May last year, the Ministry decided to explore the possibility of its takeover by one of the OMCs under the ministry. However, the OMCs declined saying that its commerce did not come under their core business activity.
Revival was considered next. But the ministry found that “even for continuing day-to-day business activities in the current market conditions, there appears unlikelihood of any improvement in its performance even if it is sought to be revived through fresh infusion of funds”.
Once it is shut down, the ministry plans to dispose all movable and immovable assets under the guidelines framed by the Department of Public Enterprises.
Currently, the government and its OIDB holds 99.46 per cent of company’s equity and balance is held by others including Balmer Lawrie and financial institutions.
Delhi Police case filed after seven puppies are killed in Dwarka housing society