Move aimed at reducing overhead expenses, improving efficiency.
The Kerala government proposes to merge some of the public sector undertakings (PSUs) under the department of industries in order to reduce overhead expenses and improve the overall efficiency.
The state had initiated the process in November 2009 and identified over 10 companies in the first phase. It plans to merge the companies involved in similar line of production.
“The government proposes to complete the merger and amalgamation process within the next one year. However, it may take a longer time to complete as a lot of procedural formalities are involved. In fact, the process can be initiated only with the consensus of trade unions,” a top official of the state industries department said. Moreover, approval from various agencies too was required.
There are also plans to transfer a part of the government shares in certain PSUs to other PSUs. The modalities of the transfer is being worked out by the industries department.
Among the first ones to be merged include the four subsidiaries of the Kerala State Electronics Development Corporation based in Kannur. The state has already formulated guidelines for the merger of Keltron Component Complex Limited, Keltron Magentic Limited, Keltron Crystals Limited and Keltron Resistors Limited into a single company and is awaiting the approval of corporate affairs ministry.
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The process is expected to be completed in three months, the official said.
According to the government order, the Kerala State Industrial Products Trading Corporation will merge with Travancore Titanium Products Limited while Sitaram Textile Mills at Thrissur and Trivandrum Spinning Mills are being merged with the Kerala State Textile Corporation.
Cement, clay & ceramics
Three major PSUs engaged in producing cement, clay and ceramics will from a single entity. They are Palakkad-based Malabar Cements Limited, Kottayam-based Travnacore Cements Limited (TCL) and Kerala Clays and Ceramics Products Limited, based in Thiruvananthapuram.
All the three companies are currently making profits. While Malabar Cements clocked a profit of Rs 43.71 crore in 2008-09, Travancore Cements made a profit of Rs 1.44 crore and Kerala Clays Rs 2.02 crore. TCL and Kerala Clays have embarked on major expansion initiatives. It is proposed that Malabar Cements will acquire a certain percent of equity shares in these companies and the value will be utilised for the expansion projects.
Another proposal is the merger of Kerala Minerals and Metals Limited (KMML) of Kollam, Travancore Titanium Products Limited (TTPL), both engaged in the production of Titanium Dioxide, and Kochi-based Travancore Cochin Chemicals (TCC), a producer of caustic soda with hydrochloric acid as a byproduct.
KMML and TCC registered a profit of Rs 70.84 crore and Rs 15 lakh respectively in 2008-09, while TTPL was in the red.
The combined entity will be a viable and profitable option as each company depends on the other for various raw materials, the official said, adding KMML was going for a major expansion plan post which its requirement for hydrochloric acid would increase. To meet this, TCC would have to augment its production.
Kerala Electrical and Allied Engineering
Similar proposal has also been mooted for Kerala Electrical and Allied Engineering Company Limited, Traco Cable Company Limited and United Electrical Industries, all operating in the electrical goods manufacturing segment. All the companies were in the black during 2008-09.
According to the industrial policy, the government is against reducing workfoce in PSUs. Instead, it had an agreement with the trade unions to enhance productivity and quality of products in various companies without reducing the employee number. The government intends to continue with the policy in the merged entities too, the official added.
There are 63 PSUs under the industries department, of which 17 have closed down. The PSUs in total registered a net profit of Rs 169.45 crore in 2008-09 as against Rs 80.31 crore in the previous fiscal, a growth of 111 per cent. During last fiscal, 28 companies recorded profit, while 13 were in the red.