Sick PSUs list is starting point for FY16 divestments

A list of 65 floundering central public sector enterprises will serve as the starting point of the government’s Rs 28,500-crore (Rs 285-billion) ‘strategic disinvestment’ plan for 2015-16.

These include Air India, Fertilizer Corporation of India, Hindustan Shipyard, HMT, Mahanagar Telephone Nigam Ltd, Bharat Coking Coal and ITI.

Officials from the finance ministry’s department of disinvestment and the heavy industry ministry’s department of public enterprises are likely to meet soon to discuss the names on the list.

The decision is whether these can be sold to a private investor or group of investors, with the aim of turning around the companies selected for strategic sale, government sources told Business Standard.

The list is of companies declared sick as on March 31, 2014.

A CPSE is considered sick if it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth immediately preceding the year.

Some other CPSEs in the list are Bharat Wagon and Engineering, Heavy Engineering Corporation, Tungabhadra Steel, Scooters India, Bengal Chemicals, National Jute Manufacturers, Burn Standard, Konkan Railway Corporation and British India Corp.

The sources said the meetings would kick off a lengthy strategic sale road map.

There will be meetings across stakeholder ministries, after which there will be cabinet and regulatory and, in some cases, even Parliament approvals, selection of suitors with have a viable turnaround plan, and a number of other processes.

“No names have been decided. The various departments concerned want to take an informed decision,” a senior official said.

Last week, Heavy Industries Minister Anant Geete had said in Parliament that five of the 65 CPSEs would be closed, including three subsidiaries of HMT, the employees offered ‘very good’ voluntary retirement schemes.

He did not name other candidates but there was speculation on whether the high-profile among these, such as AI or MTNL, would be shut down.

“Some of the companies will be shut down, some may be sold to strategic investors and some revived by the government. We haven’t decided on the final modalities,” said the official quoted above.

REMEDIAL REFORMS

• Officials of disinvestment and heavy Industries departments to meet soon to start discussions on strategic sale
• Strategic sale candidates likely to be picked from sick PSU list of 65 companies
• Those in the list include Air India, MTNL, ITI, HMT, Hindustan Shipyard, Bengal Chemicals, STCL
• Officials say process is lengthy; just selecting names for strategic sale will involve multiple meetings
• Companies will be sold to strategic investors with the aim of returning them to profitability