Monday, August 3, 2015

Mizoram Cabinet approves closure of three PSUs, downsizing two others

IT may be an alarming bell to the non-performing PSUs. In a move that may not send a healthy message across the state-owned firms, be it at state level or at the national level, the Mizoram state Cabinet has approved a proposal to close down three of Mizoram’s Public Sector Enterprises and restructure and downsize two others. The key point here is that the decision to overhaul all state-owned enterprises in the state...
follows a pact between the state government and the Asian Development Bank as part of a $100 million loan aimed at managing state finances better.
Non-performance has been a thorny issue confronting the very survival of the PSUs. The NDA govt had earlier decided to shut down five terminally sick PSUs including three units of HMT.
Another reason has been that successive CAG reports show the PSEs have been making losses year after year and contributing just a fraction of a percentage to the state’s coffers, according to a report by The Indian Express.
The state Cabinet has approved the closure of the 27-year-old Zoram Handloom and Handicrafts Development Corporation Limited (ZOHANDCO), the 24-year-old Zoram Electronics Development Corporation Limited (ZENICS) and the 22-year-old Mizoram Agricultural Marketing Corporation Limited (MAMCO).
The state government had earlier notified the Mizoram State Enterprises’ Early Retirement Rules 2015 for employees.
The government also set in place a mechanism to absorb employees who do not opt for early retirement.
This will be done though relaxation of the state’s Public Service Commission’s selection process.
The Cabinet has also approved the “downsizing and restructuring” of two other PSEs — the 30-year-old Zoram Industrial Development Corporation Limited (ZIDCO) and the 26-year-old Mizoram Food and Allied Industries Corporation Limited (MIFCO).
The PSEs together employ about 270 people.
The latest CAG report shows that the PSEs overall incurred annual losses of between Rs 4.86 crore at its peak in 2010-11 and 1.70 crore at its lowest ebb in 2013-14. 
An Asian Development Bank assessment from July 2009 had said: “The performance of state public sector enterprises (PSEs) has … affected the state budget. Currently, all of the five small PSEs in Mizoram are loss-making… The PSEs are in financial distress requiring huge amounts of budgetary support to sustain them…. In spite of a periodic infusion of equity capital and grants, the companies continue to report losses.”

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