India's first PSU privatisation sold Modern Food to Hindustan Lever for Rs 1.05bn in 2000

Modern Food Industries (India) Limited was the state-owned maker of Modern bread, with 14 bread plants — and chronic losses. Through the 1990s India had only sold minority slivers of public sector units, which changed nothing about how they were run. In the 1999-2000 budget the government shifted to 'strategic disinvestment': selling controlling stakes to operating companies. Modern Food was chosen as the first test.

In February 2000 the Government of India sold 74% of MFIL to Hindustan Lever Limited for an upfront Rs 1.05 billion. The government said HLL was the only bidder that committed to modernisation investment. Critics questioned selling the pioneer case to a multinational, but the deal deliberately transferred management control, not just shares.

The first year was rough — losses initially rose as HLL restructured — but the operating turnaround showed quickly: bread sales grew from Rs 780 million in 1999-2000 to Rs 1.02 billion in 2000-01, and HLL projected losses narrowing to Rs 200 million. The sale broke the political taboo: BALCO, VSNL and other strategic sales followed.

Rs 1.05bn for 74%; bread sales rose from Rs 780m (1999-2000) to Rs 1.02bn in the first year under HLL, and losses fell from Rs 480m toward Rs 200m

Minority stake sales in the 1990s raised money but left PSUs badly managed; selling control transferred actual management

Choosing a small, loss-making consumer company as the first case lowered the political risk of the precedent

A strategic buyer with brands and bakery distribution could fix what the state could not

Success opened the door to the larger strategic sales of 2001-2002 (BALCO, VSNL, CMC)

Selling control, not just minority stakes, is what transfers management: the first sale of a whole PSU showed that a strategic buyer with brands and distribution can restart a sick public unit.

Modern Food's sale became the textbook first case of Indian privatisation, studied as the start of strategic disinvestment. HLL (later Hindustan Unilever) integrated the Modern bread brand into its foods business. India went on to sell controlling stakes in BALCO (2001), CMC (2001) and VSNL (2002), and the policy framework evolved into today's DIPAM-run strategic sale programme.