PSU panel sets up firms' alliance

The Board for Reconstruction of Public Sector Enterprises (BRPSE) has established an alliance of profit-making construction companies in the public sector.

The alliance is to work in a mutually beneficial manner with lesser PSEs. It is also considering a performance related pay parameter and has recommended revival packages for three PSEs to the government.

The alliance has been formed by Indian Railway Construction Company (IRCON), Braithwaite Burn and Jessop Construction Ltd (BBJ), National Building Construction Company(NBCC), National Products Construction Company (NPCC), Engineering Projects India Ltd (EPI), and Hindustan Steel Works Construction Company Ltd (HSL).

The alliance has its work cut out. If a PSE's core competency lay in building bridges and steel structures, but had a negative networth, the firm could strike a strategic alliance with a profit-making company, said an heavy industry ministry official.

In the meanwhile, the sick firms' board has approved revival packages for Hindustan Salts, Bridge & Roof Company India Ltd and Braithwaite Burn & Jessop Construction.

Bridge & Roof  Company (India) Ltd will get Rs 11 crore as loan, which will be converted into equity, and Rs 29 crore as interest that will be written off.

The company has been showing signs of incipient sickness. It stands to lose over Rs 35 crore because of the increase in steel prices by over 16 per cent "" a problem to be addressed by the revival package.

The revival package for Braithwaite Burn & Jessop includes a waiver of Rs 50 crore in interest accrued over the past 25 years for a principal amount of Rs 5 crore.

Of the original loan amount, Rs 3 crore will be converted to equity and a zero interest debenture of Rs 2 crore will be provided.

The company is engaged in the construction of steel bridges and marine structures. Its turnover in 2003-04 was Rs 29.80 crore. The main reasons for its losses are lower selling prices and a heavy interest burden.

The revival package for Hindustan Salts includes a waiver of loans up to Rs 69 crore, apart from Rs 9.6 crore of cash infusion with Rs 4.8 crore to be provided by the State Bank of India against a government guarantee.

In an effort to professionalise the management of the PSEs, the board is planning to create a separate cadre. A National Academy for PSEs on the lines of L'Ecole Nationale d'administration, ENA of France was discussed at a meeting today.