<div><em>Department of disinvestment to prepare the roadmap for revival or closure of loss-making central public sector enterprises, reports <strong>Ashish Sinha</strong></em></div><div> </div><div>The Cabinet Secretariat has asked the department of disinvestment under the finance ministry to draw out a clear roadmap for over 42 loss-making central public sector undertakings (CPSEs) for disinvestment, revival or closure purposes. </div><div> </div><div>Overall, there are 65 loss-making CPSEs which have been identified over last several years. Of this list, five CPSEs have been earmarked for closure within the current financial year. There are 11 others which will stop getting the non-plan budgetary support from next financial year and may ultimately be closed, sources said. </div><div> </div><div>According to sources, the Board for Reconstruction of Public Sector Enterprises (BRPSE) has recommended revival packages for 48 CPSEs, which has been approved by the government, but still far away from getting implemented.</div><div> </div><div>Therefore, under the direction of the Prime Minister’s Office, the Cabinet Secretariat has asked the department of disinvestment to chalk out a strategy of these loss-making CPSEs. Some of these CPSEs also fall in the category of ‘sick’ units. </div><div> </div><div>A CPSE is declared sick after it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during four preceding years. There are 65 units in the list of sick public sector units as of March 31, 2014.</div><div> </div><div>“There department of disinvestment will be overseeing the process of revival or closure and sale of assets of these large numbers of loss-making CPSEs. Crore worth of assets are locked in these non-performing central PSUs which needs to be monetised quickly,” said a senior official dealing with the matter. </div><div> </div><div>The CPSEs which are part of this list include MTNL, Air India, Bengal Chemicals, Konkan Railway Corporation, Hindustan Shipyard, HMT, Bharat Coking Coal, ITI, Bharat Wagon and Engineering, Tungabhadra Steel, Scooters India, Heavy Engineering Corporation, National Jute Manufacturers, Burn Standard, Fertilizer Corporation of India, British India Corp among several others.</div><div> </div><div>The government is evaluating a series of measures before it for the revival of sick or loss-making CPSEs including new norms. These include setting up a separate entity funded by financially strong CPSEs to look at management and revival of sick companies; Profitable PSUs, that have cash on their books can be roped in to support and revive the loss-making/sick CPSEs as part of their mandatory corporate social responsibility (CSR) practice, sources said. Some of these measures are under active consideration of the government, a government official said. </div><div> </div><div>Meanwhile, five sick central PSUs that are facing closure in next three months will require funds towards the voluntary retirement scheme for around 2,800 employees which are on rolls. These five sick CPSEs are HMT Bearings, HMT Watches, HMT Chinar Watches, Tungabhadra Steel Products and Hindustan Cables.</div><div>According to Anant Geete, the Union minister for heavy industries and public enterprises, the government is also looking at creating a land bank pool comprising the surplus land with PSUs.</div><div> </div><div>The NDA government has already decided to give VRS to 2800 employees of these sick central PSUs which is expected to free assets worth Rs 22,000 crore.<br> </div><div>“Since 2007 there is not production in these units and we have already spent about Rs 4,000 crore only on salary and wages of the employees. How long will we continue to spend on salaries in these non-productive units,” the minister had said recently.</div><div> </div><div>As per the government estimates, the cost of shutting these five sick units will work out to Rs 1,400 crore while the asset value of these companies stand at Rs 22,000 crore which includes all the immovable properties including land, plant and machinery. These will be sold to interested parties in “as-it-is, where-it-is” basis. “The decision for the sale of property is yet to be taken”, the minister said. </div><div> </div><div><em>ashish.sinha@businessworld.in</em></div><div> </div><div> </div>
