A retired IAS officer of 1979 batch, Alexander Luke, has written a letter to Gujarat chief secretary Anil Mukim, pointing out how an investment of Rs 250 crore made by Vadodara-based public sector unit (PSU), Gujarat State Fertilisers and Chemicals Ltd (GSFC), in a Canadian firm seven years ago has eroded to just Rs 10 crore.
In the letter written to Mukim and GSFC Chairman and Managing Director, Arvind Agarwal, on November 2, 2020, the retired IAS officer has pointed out that the amount invested in Canadian firm M/s Karnalyte Resources Inc for a 20 per cent stake the company in 2013 has eroded.
“The primary purpose of the investment in shares of Karnalyte was an assured supply of potash. Not one ton appears to have been received… The potash project is still at a conceptual stage,” stated Luke in an article he wrote for a web portal, counterview.net, on this issue.
According to him, the GSFC later increased its stake in the Canadian company to 38 per cent and the initial investment made by the state PSU in the Canadian firm is worth just Rs 10 crore today. Agarwal confirmed to this paper that the PSU’s equity in Karn-alyte continued to be 38 per cent.
Talking to The Indian Express, the retired IAS officer who headed the 58-year-old GSFC between 2003 and ’06, successfully turning it into a profit-making entity, said, “I waited for seven years and after realising that the brief life of the potash project is over, I decided to write about it.
No further developments are likely. If I keep quiet on the issue, I would not have been able to forgive myself.”
Luke, 72, has taken up farming at his village in Kollam district of Kerala. “I have no personal interest in this. But I needed to bring this truth to the people of Gujarat and India,” he added.
When he took up the reins of GSFC in2003, the shares of the company were trading at Rs 17 per share, which jumped to Rs 251 by the time he quit in 2006, two years ahead of his scheduled retirement. The loss-making PSU had started making profits during his tenure.
Chief secretary Anil Mukim did not respond to calls, while CMD of GSFC Arvind Agarwal said, “He (Luke) has sent an email. It is very long and has some seven or eight links in it. I have not yet seen it. He has been behind this matter for about a year. In January, he tweeted something and it is is not proper for me to comment… It is a seven-year-old matter and there is no point in going in, digging. I don’t know why he is doing it…”
On the status of GSFC’s investments in the Canadian firm and the potash plant project, Agarwal said, “Many investment decisions in the course of business may not succeed. It is not proper to blame anyone for it. A person might take 10 decisions, nine may succeed, one may not. If we hold a person responsible for a decision that may not have succeeded, then by that logic nobody will take decisions.”
Adding that GSFC continues to have 38 per cent equity, he added, “The question of dropping it does not arise as we have invested in the shares of the company… We have not invested in a plant or project. It is now for the company to take up the project. We are not in the day-to- day management of the company… Now when company finds the Potash market suitable, they will take up the project.”
Karnalyte Resources Inc states on its website that it was founded in 2007 and entered into a strategic partnership with GSFC for USD 44.7 million in 2013. Under this agreement, GSFC was to purchase 350,000 tonne of potash per year in Phase-1. The agreement also states that GSFC was to increase its off-take to 600,000 tonnes per year in Phase 2 and up to 10,00,000 tonne per year in Phase 3.
The chairman board of directors of Karnalyte Resources is Vishvesh D Nanavaty who is also the chief finance officer at GSFC.