Loss-making PSUs? Not in Kerala

When public sector firms are run down as public fund-drenchers, several state-run enterprises in Kerala have made dramatic a turn-around, owing to a multi-pronged strategy of the Left Democratic Front government to bring back the loss-making units from the verge of collapse.

As many as 35 companies under the industries department, several of which were in the red three years ago, have clocked profits in the last two years and a few more are on the path of revival.

Infusion of professional management, upgrading of technology, mergers and amalgamations of units and business collaborations with the Central PSUs are some of the measures that helped the state-owned companies to turn the corner.

According to state Industries Minister Elamaram Kareem, the prime-mover of the revival process, this is largely the result of the political determination of the LDF, especially the lead partner CPI-M, to safeguard the PSUs from the 'onslaught' of all-round privatisation and globalisation.

Kareem, a prominent leader of the CPI-M's trade union wing, CITU, said the industrial history of independent India showed that public sector companies always had a vital role in the country's economy, which no ardent advocate of globalisation and privatisation could deny.

Kerala has a total of 114 public sector enterprises, out of which 46 are under direct control of industries department.

According to public sector analysts, many of the PSEs were set up by the successive coalition governments, headed by the Congress or the CPI-M, to suit their political conveniences such as accommodating middle-rung politicians as chairpersons or board members or generating jobs far in excess of their actual need or financial capacity.

Over the years, several of them have incurred huge losses becoming a burden on the government. In the socio-political context of Kerala, options like abrupt closures, large-scale retrenchment or even voluntary retirement schemes are impractical.

This has made the government to sustain these companies either on budgetary support or by facilitating loans from banks and other credit institutions on the state guarantee.

When the revival process began three years ago, the units under the industries department alone had an overall loss of Rs 69.64 crore (Rs 696.4 million).

The scenario had since then changed dramatically with 28 units becoming profitable together leaving a surplus of Rs 180.19 crore (Rs 1.802 billion) in 2008-09. In 2009-10, the number of companies making profit rose to 35 and the total profit to Rs 292.80 crore (Rs 2.928 billion).

One vital factor of the revival initiative was the strategic tie-up between the state and central PSUs in the similar field.

A outstanding case is that of KELTC, a high-tech engineering unit which used to maunfacture components and sub-assemblies for top institutions like the Indian Space Research Organisation.

Through an agreement between the state and the Centre, the unit, located in the state capital, was taken over by the Defence Research and Development Organisation and made the assembly and integration facility for Brahmos Missile Project.

"This is a classic case of how the infrastructure and human resources of a company could be revitalised. Now the employees here have a new found hope and spirit", said a spokesperson for Brahmos Aerospace Thiruvananthapuram Ltd, as the unit is now known.

Similarly, business tie-up had been struck between state units with leading central companies NTPC, BHEL, SAIL and the Railways. This approach was adopted in the case of the state units themselves by synergizing technological competence and human resources of companies engaged in the same line of production.

Besides infusing modern technology and professional management, the government had given budgetary support for saving the companies from debt burden through one-time settlement of their bank loans.