The Alappuzha-based Kerala Constructions Component Ltd, a state public sector undertaking engaged in the manufacturing of brick and roof tiles, has downed shutters. The company had offered voluntary retirement scheme to all its 115 employees.
A government order in this regard was issued in June this year and the state Cabinet had recently cleared it. The decision to close down the unit was taken by the Enterprises Reforms Committee as the company had become unviable and was found to have no strategic importance or intrinsic potential.
According to an ERC official, the net worth of the 40-year-old company had dipped Rs 1.9 crore (Rs 19 million) and it had been incurring losses since its inception except during 1993-94 and 1994-95.
The official attributed the company's situation to unscientific diversification and under utilisation of the installed capacity. Kerala has around 104 PSUs, of which the state has identified around 16 loss-making firms for privatisation.
If no private sector companies come forward to take over these units, the only alternative left for the government would be to close them down.
According to sources, Kerala Soaps and Oils Ltd, Travancore Plywoods Ltd and Kerala Spinners are among the PSUs facing imminent closure in the near future.
Also, 11 private sector companies, including business houses from Dubai and Chennai, have expressed interest in purchasing PSUs such as Keltron Counters Ltd, Kerala State Salicylates and Chemicals Ltd, Kerala State Detergents and Chemicals Ltd and Astral Watches Ltd.
According to the latest report of the Comptroller and Auditor General of India, of the 104 PSUs in Kerala, 13 are not functioning, 54 incurred an aggregate loss of Rs 363.98 crore (Rs 3,639.8 million) and 16 earned an aggregate profit of Rs 134.39 crore (Rs 1,343.9 million) for the year ending March 31, 2002. While the ERC has recommended a list of 27 PSUs for restructuring, the state government has approved only 16 PSUs.