Rs 5,000 crore PSU rejig plan set in motion

Pending formation of the Board for Reconstruction of Public Sector Enterprises (BRPSE), the heavy industry and public enterprises ministry has sought support from the finance ministry to revive 21 loss-making companies at a cost of Rs 5,000 crore.

The finance ministry was studying the plan in detail, which would involve fresh infusion of Rs 2,000 crore in some public sector units apart from closure of seven companies, highly placed sources said.

Prime Minister Manmohan Singh had told the conference of the public sector units chief executives last week that the government would soon constitute the Board for Reconstruction of Public Sector Enterprises, which would advice on restructuring of PSUs; the options would include disinvestment, outright sale or closure.

Under the plan submitted by the heavy industry ministry, the government will also have to either waive the outstandings from the loss-making PSUs or convert a part of them into equity.

The cost of waiver or conversion of its dues into equity will also be huge as the 21 companies that are to be revived under the plan owe around Rs 2,500 crore to the government.

The cost of closure of seven PSUs have been worked out to be close to Rs 1,000 crore. Under the plan, fresh funds to the tune of Rs 1,000 crore will be infused into HMT and its subsidiary companies and part of their dues, too, will be converted into equity or waived off.

Other companies that could fall under the revival plan include the Nagaland Paper and Pulp Company and the Bharat Heavy Plates and Metals.

The companies which could be closed down include, Bharat Opthalamic Glass, which has already ceased production, and seven of the ten units of the Cement Corporation of India, which are already closed due to various factors.

While presenting the Budget for 2004-05, Finance Minister P Chidambaram had announced establishment of the Board for Reconstruction of Public Sector Enterprises.

The establishment of the Board for Reconstruction of Public Sector Enterprises was also promised in the National Common Minimum Programme of the United Progressive Alliance government, which said that the chronically loss-making companies would either be sold off or closed after all workers had been given their legitimate dues and compensation.

The United Progressive Alliance government would induct private industry to turn around companies that had potential for revival, the National Common Minimum Programme had said.

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Revival plans

The heavy industry and public enterprises ministry has sought support from the finance ministry to revive 21 loss-making companies at a cost of Rs 5,000 crore

The finance ministry is studying the plan in detail, which will involve fresh infusion of Rs 2,000 crore in some public sector units apart from closure of seven companies.

Under the plan submitted by the heavy industry ministry, the government will also have to either waive the outstandings from the loss-making PSUs or convert a part of them into equity