Great Eastern keeps PSU sale drive alive

In 2003 when the West Bengal government initiated public sector units (PSU) restructuring programme, it was believed that off loading government's stake in PSUs would deliver effective social welfare programme in the state along with rejuvenating some of the ailing public sector units.

Four years down the line, the government is spending more time in appointing consultant after consultant to do the job, rather than releasing value from the PSUs and ploughing back the profits through achievement of its fiscal targets.

Of the 15 PSUs identified by consultants for revival through the joint venture route by its global consultants in 2003, only four have found partners.

The process generated just a little more than Rs 60 crore, much less than the anticipated fund mobilisation of Rs 125 crore, admitted Ardhendu Sen, the secretary of the public enterprises department.

He refused to accept though that the state PSUs failed to attract investors.

Of the Rs 60 crore, nearly Rs 52 crore came from 90 per cent stake sale and the transfer of Kolkata's Great Eastern Hotel to the Bharat Hotels group of the Suri family.

About Rs 5 crore came from 74 per cent stake dilution in West Bengal Agro-Textiles Corporation Limited.

West Bengal Chemical Industries Limited and Engel India Machines and Tools Limited yielded about Rs 2 crore. The bidding process failed in Webel Power Electronics Limited, Webel Tools Limited, West Bengal Plywood and Allied Products Limited, Neo Pipes and Tubes Limited, The Carter Pooler Engineering Limited, Lily Biscuits, National Iron and Steel Company Limited, Apollo Zipper and Krishna Silicate and Glass(1987) Limited.

Two of the PSUs, The Carter Pooler Engineering Limited and Apollo Zipper, failed to find a single bidder in the first attempt.

Third round of bidding was being planned for two PSUs, named Lily Biscuits and Neo Pipes & Tubes.

The total fund received by the government by DFID till now of Rs 208.67 crore was now exhausted, having been used to pay off workers and in their rehabilitation under early sepration schemes.

Further, of the 15 PSUs identified to be closed and subsequently sold off under the asset sale route, only one PSU called IPP Limited could be sold at Rs 11 crore.

Further, the government failed to find partners for more than a dozen units recommended for joint venture development by a global consultant in 2003.

In May 2006, the government approved a Rs 1,700 crore package for restructuring 29-odd PSUs aided by funding from UK's department of international development (DFID) to lay off workers at these units and free the assets for sale.

The process that followed involved identification of unviable and viable PSUs and managing the bidding process for the transfer or sale of PSUs or their assets on case to case basis.

Till date little less than Rs 2 crore has been disbursed to three consultation firms, PricewaterhouseCoopers, Ernst & Young and Mott Macdonald, if one senior government official is to be believed.

A fresh round of bidding is likely to follow to give shape to the recommendation by the three consultants.

Already 33 bidders have reportedly lined up for this, and eight have been shortlisted by the government.

However, the government is refusing to learn the lessons from the past. In contrast to the West Bengal government's experience, its sister Left Front regime in Kerala managed to overcome a net loss of around Rs 63 crore on account of PSUs in 2005 "� 2006 and reported a net profit of Rs 92 crore in 2006"�07.