|Strategic sales start|
|Friday, 30 September 2016 05:00|
Even if units not sold, chronic loss-makers to be shut
With 77 loss-making PSUs notching up losses of close to Rs 27,500 crore in FY15—after Rs 27,000 crore in FY13, these had fallen to Rs 10,500 crore in FY14—the government is finally moving to stop this constant haemorrhaging. Though the high-profile Air India and BSNL are not on the list at the moment, an impressive start has been made based on the recommendations of NITI Aayog to shut 26 loss-making PSUs and to make strategic sales of another 44. Bharat Pumps & Compressors, the first unit selected for a strategic sale in Wednesday’s Cabinet meeting, seems an unfortunate choice given units in which strategic sales have taken place in the past include VSNL and Maruti Udyog—at R54 crore in FY15, its losses are also quite low compared to others, as are its long-term and short-term loans. But on the same day that the Cabinet gave an in-principle approval for a strategic sale of Bharat Pumps, it also approved the closure of Hindustan Cables Limited—the PSU that made losses of over Rs 900 crore in FY15 has long-term loans of close to Rs 6,000 crore. Given it has been out of production since 2003(!), keeping this white elephant alive for the sake of around 1,500 workers was nothing short of scandalous—a retrenchment of these workers should have been done at least a decade ago. Even worse than Hindustan Cables is Hindustan Photo Films Manufacturing Company Limited that not only made losses of close to Rs 2,200 crore in FY15—and R1,800 crore the year before that—it has run up long-term loans of close to Rs 10,200 crore. All of this just to keep under 350 persons employed.
What is especially encouraging in this context are the guidelines issued by the department of public enterprises on September 7 on timelines for the closure of sick/loss-making PSUs and the timely disposal of their movable and immovable assets. All VRSs, the guidelines state, are to be based on the salary scales of 2007 and, for instance, a period of two months is given as the maximum to estimate all dues including those of employers and those of creditors. All movable assets are to be sold within three months of ‘zero date’ and employees who do not avail of VRS are to be retrenched within four months of ‘zero date’; land is to be sold to government departments within a period of six months and, if they do not want it, another six months is to be allowed to auction it to private players—during this period, the company’s name is to be deregistered from the Registrar of Companies. Since all of this applies to PSUs where the Cabinet has given an approval, and ‘zero date’ is the time of the preparation of the minutes of the Cabinet meeting, the stage is set for quick movement on the PSU front.