7 PSUs in red may turn around

HMT (Machine Tools), HMT (Watches), Braithwaite, Andrew Yule may be back in black.

Riding on the back of strong manufacturing growth, seven chronic loss-making central public sector units are expected to witness a turnaround this year. If they do turn around, the majority of PSUs under the department of heavy industry will report profits.

The department's upbeat forecast about the seven PSUs has come along with similar independent reports about PSUs in general.

The National Council of Applied Economic Research's Business Expectations Survey-April 2006 showed public sector firms were among the most upbeat about the future.

Little wonder that some of the chronic loss-making PSUs expected to turn around this year included long-standing names in manufacturing such as HMT (Machine Tools) and Braithwaite & Company.

The others that are expected to stage a turnaround are Andrew Yule & Company, Praga Tools, Heavy Engineering Corporation, HMT (Watches) and HMT (Chinar Watch).

The wave, riding on which these companies are expected to turn around emerged last year. The manufacturing sector grew by 9.4 per cent in 2005-06, faster than the overall industrial growth rate of 9 per cent.

A spin-off of the industrial buoyancy is that the government is inclined to pump in fresh funds to revive some of the loss-making PSUs. For instance, the boom in the capital goods sector has led to the heavy industry ministry recommending to the Cabinet a Rs 700-crore revival package for HMT (Machine Tools).

A turnaround will mean huge savings for the government. Of the 34 operational PSUs under the department of heavy industry, 21 are expected to have made a loss in 2005-06. Their combined loss in the year is likely to be Rs 1,952 crore. The seven PSUs expected to turn around are together expected to register a loss of over Rs 45 crore.