Panel backs using cash-rich PSUs to revive sick units

A committee headed by NTPC Chairman Arup Roy Choudhury has endorsed the Government’s view on revival of sick public sector undertakings with the help of cash-rich PSUs.

The committee has submitted its report to the Ministry of Heavy industries and Public Enterprises. It had been asked to examine the feasibility of cash-rich Maharatnas, Navratnas and other Central public sector enterprises (CPSEs) seeding a joint venture (JV) company that would revive sick PSUs.

A senior Heavy Industries Ministry official said there would be consultations with cash-rich PSUs and accordingly, a detailed note would soon be put up before the Cabinet for a final decision. Profitable PSUs have over Rs. 2 lakh crore of cash lying with them, mainly in banks.

Heavy Industries Minister Anant Geete recently said there are 70 sick PSUs, of which 43 can be revived. However, according to an answer given by the 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,” he explained.

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.

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