Sick govt firms can get into real estate

The booming real estate market in India has caught the attention of the Board for Reconstruction of Public Sector Enterprises (BRPSE) as a route for reviving sick public sector units.

BRPSE's new chairman Nitish Sengupta has suggested that at least three ailing companies, which have been referred to the board, hive off some of their land and get into real estate development to become profitable again.

The companies are Bangalore-based Indian Telephones Industry (ITI), Hindustan Machine Tools (HMT) Ltd and Fertilisers and Chemicals Travancore Ltd (FACT) in Cochin.

"Real estate is now an industry. These three companies have a lot of surplus land and this can be used for real estate development," Sengupta told Business Standard.

Sengupta earlier suggested that these companies sell some of their land but HMT officials said they are not allowed to do so.

"Now, I have asked them to tie up with promoters or real estate developers for rental earnings. This will help pay a large part of their debt," he said. However, the CPI(M)-backed Centre for Trade Unions (CITU) thinks it will be a "disaster to give factory land for housing societies".

CITU Secretary Dipankar Mukherjee said: "These companies require financial restructuring, but the government is backtracking from this duty. Keeping in view the product profile (of these companies), this proposal is absolutely uncalled for."

Apart from these three companies, the BRPSE has recommended that Srinagar-based HMT Chinar Watches Ltd be handed over to the Jammu and Kashmir government.

"The first preference is to give it to the state government. If it is not interested, other public sector or private companies can take it over," said Sengupta.

"HMT Chinar used to make mechanical watches, which don't have a market anymore. The factory is close to the Srinagar airport and can be used for other purposes," he added.

Earlier, the proposed divestment of HMT Chinar had to be shelved as the company could not attract private players.