Gujarat to go slow on profit-making PSU disinvestment

Puts Alcock Ashdown divestment on hold.

In a significant development, the Gujarat government has decided to go slow on the divestment process of profit-making PSUs.

The state government has already decided not to go ahead with the divestment process of Alcock Ashdown (Gujarat) Ltd (AAGL), a 100 per cent government-owned shipbuilding company. AAGL has been on the block for over three years now.

Senior government officials said the government was seriously considering putting on hold divestment of profit-making undertakings.

"The government believes that divesting at this juncture may not fetch the right price," said a senior government official.

The state government has informed industries commissioner and chairperson of AAGL not to accept the price bid and not to go ahead with the disinvestment. As a result of the boom in the shipbuilding industry, the order book of the state-run shipyard is close to Rs 1,400 crore.

The divestment process of Alcock had hit a roadblock in September last year when both ABG Shipyard Ltd and Elecon Engineering Ltd, the companies shortlisted for buying out the government's stake in the company, had quoted much less than the reserved price.

In October 1992, the state government had constituted the State Finance Commission to examine the potential for privatisation and disinvestment of the PSUs. A high-level committee under Hasmukh Shah submitted its report analysing prospects of restructuring and disinvesting 13 state PSUs.

However, some of the state PSUs have done extremely well in the recent past. The Gujarat Mineral Development Corporation (GMDC), Gujarat Narmada Valley Fertiliser Company (GNFC), Gujarat Alkalies Company (GACL), Gujarat State Fertilisers and Chemicals (GSFC), Gujarat State Petronet (GSPL) have seen a turnaround in their profits in the last three to four years.