Mystery around Gujarat PSU 'transfer' of Rs 250 crore to Canadian firm Karnalyte

By AK Luke, IAS (Retd)*
While returning from a Board meeting of the Oil India Limited (OIL) in Ahmedabad some time in 2012, two officers of the Gujarat State Fertilizers and Chemicals Ltd (GSFC), Nanavaty and Patel, saw me off at the airport. They said they were proceeding to Canada in connection with a project GSFC had entered into with a company there. As we were running late, I hastily wished them the best.
Later, it appeared that the company was Karnalyte Ltd and it was for a potash mining project in Canada. Sanjiv Varma, the officer dealing with the project, later told me over phone that the entire GSFC contribution of Rs 250 crore had been transferred to the project in Canada (GSFC had stated in a notice that Varma would answer all queries on this project and provided his number). I thought this odd as such contributions are normally in stages matching project progress.
Even odder was GSFC going in for a mining project when potash was readily available in the international market; in my time in GSFC no shortage of potash was faced. GSFC had never tied up for such backward integration of raw material except when, again in my time (2003-06), we took a small equity for Rs 25 crore, if my memory serves me right, with Groupe Chimique Tunisian (GCT) of Tunisia for phosphoric acid. Its production was mainly confined to Morocco and Tunisia, and as position was tight at times, we imported it in large quantities.

Did GSFC, acting speedily, ensure the return of its Rs 250 crore? If so, it is to be complimented. If not, a deeper probe is called for

Our potash requirement was never so large as to justify a backward integration investment in a distant land. I continued tracking the project for a short time over the net, as Karnalyte was reporting on its status presumably as per Canadian law. GSFC was silent on its sites. I then lost interest.

A month back I saw the Karanlyte shares which the GSFC had purchased for Canadian $ 8.15 had come down to $ 0.2 per share, today it is $ 0.17. Effectively the GSFC investment of Rs 250 crore buying 5.19 million shares at Canadian $ 8.15 per share has come down to approximately Rs 6 crore, a diminution of approximately 98% .

From the Karnalyte site it appears the project itself may not have come up. Strangely, three GSFC officials are shown as Directors of Karnanlyte. It also appears GSFC was planning to further provide backup finance to this project for $700 million. This apparently did not happen, the only saving grace in the entire saga.
As the project for which the Rs 250 crore was invested by GSFC does not appear to have come up, it is possible GSFC, acting speedily, ensured the return of its Rs 250 crore. If so, it is to be complimented. If not, a deeper probe is called for.
All the material for this piece is from open domain sites mentioned below and none are from any source within GSFC, except where explicitly stated above. My two recent e-mails to GSFC asking for details are not yet answered.

References:

---

*Ex-managing-director, GSFC (2003-06)

Comments

DILIPGANDHI-JAMNAGAR said…

Sir,
Not only Karnalite, GSFC could not implement any project within time & cost estimate after year 2003-04. Why ? Board of GSFC must look into it for survival & progress of Co.

January 04, 2020

Anonymous said…

Excellent article Sir. It is just as puzzling for the shareholders of Karnalyte Resources Inc as the company has continued a downward spiral since GSFC's involvement in 2013 when the $45 million dollar investment was made.

That equity investment brought in to Karnalyte was intended for the advancement of Karnalyte's sole asset, the Wynyard potash project, but the vast majority of that money has been spent on everything but advancing the project to the next stage.

Approximately $100 million (CAD) had been spent on advancing the project to the construction ready stage prior to GSFCs involvement in 2013.

It is reported the shares purchased in the financing are held as collateral by one of the banks in India, which as you correctly point out, the value of those shares have been decimated.

According to corporate reports from Karnalyte, the company is now changing its primary focus to building a nitrogen facility in Saskatchewan, despite failed attempts by others in the industry due to viability issues.

In December, GSFC purchased an additional 11 million shares of Karnalyte through a .17 cents rights offering, which included a peculiar clause to allow GSFC to purchase other shareholders rights against their will.

Now with allegations of breaches of Canadian securities law, alleged involvement in vote irregularities, suing individual shareholders, and the suspicious rights offering that awarded both Board and voting control of Karnalyte to GSFC, I agree 100% with you that an investigation should be requested by both countries officials.
into exactly what has gone on.

January 11, 2020

Was Netaji forced to alter face, die in obscurity in USSR in 1975? Was he so meek?

By Rajiv Shah This should sound almost hilarious. Not only did Subhas Chandra Bose not die in a plane crash in Taipei, nor was he the mysterious Gumnami Baba who reportedly passed away on 16 September 1985 in Ayodhya, but we are now told that he actually died in 1975—date unknown—“in oblivion” somewhere in the former Soviet Union. Which city? Moscow? No one seems to know.

Love letters in a lifelong war: Babusha Kohli’s resistance in verse

By Ravi Ranjan* “War does not determine who is right—only who is left.” Bertrand Russell’s words echo hauntingly in our times, and few contemporary Hindi poets embody this truth as profoundly as Babusha Kohli. Emerging from Jabalpur, Madhya Pradesh, Kohli has carved a unique space in literature by weaving together tenderness, protest, and philosophy across poetry, prose, and cinema. Her work is not merely artistic expression—it is resistance, refuge, and a call for peace.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Asbestos contamination in children’s products highlights global oversight gaps

By A Representative A commentary published by the International Ban Asbestos Secretariat (IBAS) has drawn attention to the challenges governments face in responding effectively to global public-health risks. In an article written by Laurie Kazan-Allen and published on March 5, 2026, the author examines how the discovery of asbestos contamination in children’s play products has raised questions about regulatory oversight and international product safety. The article opens by reflecting on lessons from the COVID-19 pandemic, noting that governments in several countries were slow to respond to early warning signs of the crisis. Referring to the experience of the United Kingdom, the author writes that delays in implementing protective measures contributed to “232,112 recorded deaths and over a million people suffering from long Covid.” The commentary uses this example to illustrate what it describes as the dangers of underestimating emerging threats. Attention then turns...

Echoes of Vietnam and Chile: The devastating cost of the I-A Axis in Iran

By Ram Puniyani The recent joint military actions by Israel and the United States against Iran have been devastating. Like all wars, this conflict is brutal to its core, leaving a trail of human suffering in its wake. The stated pretext for this aggression—the brutality of the Ayatollah Khamenei regime and its nuclear ambitions—clashes sharply with the reality of the diplomatic landscape. Iran had expressed a willingness to remain at the negotiating table, signaling a readiness to concede points emerging from dialogue.

Authoritarian destruction of the public sphere in Ecuador: Trumpism in action?

By Pilar Troya Fernández The situation in Ecuador under Daniel Noboa's government is one of authoritarianism advancing on several fronts simultaneously to consolidate neoliberalism and total submission to the US international agenda. These are not isolated measures, but rather a coordinated strategy that combines job insecurity, the dismantling of the welfare state, unrestricted access to mining, the continuation of oil exploitation without environmental considerations, the centralization of power through the financial suffocation of local governments, and the systematic criminalization of all forms of opposition and popular organization.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Rajiv Shah Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

The kitchen as prison: A feminist elegy for domestic slavery

By Garima Srivastava* Kumar Ambuj stands as one of the most incisive voices in contemporary Hindi poetry. His work, stripped of ornamentation, speaks directly to the lived realities of India’s marginalized—women, the rural poor, and those crushed under invisible forms of violence. His celebrated poem “Women Who Cook” (Khānā Banātī Striyāṃ) is not merely about food preparation; it is a searing indictment of patriarchal domestic structures that reduce women’s existence to endless, unpaid labour.

The price of silence: Why Modi won’t follow Shastri, appeal for sacrifice

By Arundhati Dhuru, Sandeep Pandey* In 1965, as India grappled with war and a crippling food crisis, Prime Minister Lal Bahadur Shastri faced a United States that used wheat shipments under the PL-480 agreement as a lever to dictate Indian foreign policy. Shastri’s response remains legendary: he appealed to the nation to skip one meal a day. Millions of middle-class households complied, choosing temporary hunger over the sacrifice of national dignity. Today, India faces a modern equivalent in the energy sector, yet the leadership’s response stands in stark contrast to that era of self-reliance.

Search This Blog