THERE is some good news for the sick PSUs that are fighting for survival. A committee headed by NTPC Chairman Arup Roy Choudhury has supported the Government’s view on revival of sick public sector undertakings with the help of cash-rich PSUs.
The committee that submitted its report to the ministry...of heavy industries and public enterprises was tasked to examine the feasibility of cash-rich Maharatnas, Navratnas and other Central public sector enterprises (CPSEs) seeding a a joint venture (JV) company that would revive sick PSUs.
Now, the ball is in Centre's court to take a final call on reviving the sick PSUs. Obviously, the Centre will hold consultations with cash-rich PSUs and accordingly, a detailed note would soon be put up before the Cabinet for a final decision.
According a rough estimate, profitable PSUs have over Rs 2 lakh crore of cash lying with them, mainly in banks which will go a long way to bring many a sick PSUs back on the path of profit.
According to an answer given by the heavy industries ministry in Parliament, there were 61 sick CPSEs as on March 31, 2013, with over 1.53 lakh employees.
The official said the proposal drew inferences from various countries, including China. The proposed JV will select sick companies that have potential.
The selected PSU will be transferred to the books of the JV.
Once the company is revived, there will be disinvestment and the proceeds will go to the JV, so that the investee gets back its capital.
Currently, sick PSUs are referred to the Board for Reconstruction of Public Sector Enterprises for revival, restructuring, sale or closure. According to a Government resolution, a company will be considered sick if it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during the four preceding years.
Recently, the ministry announced a plan to close six PSUs: HMT Watches, HMT Bearings, HMT Chinar Watch, Hindustan Photo Films, Hindustan Cables and Tungabhadra Steel.
It has been a conscious view on the part of the government that the surplus cash of the PSUs including those of Maharatnas and Navratnas lying idle in banks may be used to nurse ailing PSUs that can be revived back to health.
Heavy industries and public enterprises minister Anant Geete had earlier said: “The new company formed will review and decide which sick PSUs can be revived. We want to give it entire responsibility to take over (revival of sick PSUs). There will be complete transparency in the process and the surplus money lying idle will certainly be used to revive sick PSUs.”
The terms of reference of the Committee also included identifying sources from which funds may be raised for the proposed entity as equity capital; and to recommend organisational structure of the proposed entity and its interface with the ministries.Earlier, in their meeting with former prime minister Dr. Manmohan Singh, the country's top public sector undertakings had asked for an 'Empowered Group of Secretaries' under the PMO to be constituted for each sector that the respective PSUs can approach on important strategic decisions.