The process has already commenced under the newly set up Implementation Secretariat (IS), an autonomous body promoted with assistance from the UK government's department for international development (DFID) to enable speedy action on SPSU reforms.

The secretariat has identified 19 such units-seven spinning mills, five sugar mills, six development corporations and a watch factory-to be privatised in the first phase, PC Parakh, chairman of IS and principal secretary, public enterprises department, told The Financial Express.

"We will call for bids for the remaining phase-I units in the first week of February 2001", he added.

The units for which the bids are proposed to be called include: APSSIDC, AP Textile Development, AP State Irrigation, AP Handicrafts, Nizam Sugars, AP Agro, AP Meat, Allwyn Watches. The sale will be finalised under the "preferred" bids model.

Meanwhile, the state cabinet has approved Chagallu Distillery of Nizam Sugars and two cooperative spinning mills at Nellore and Rajahmundry, Mr Parakh said. However, in case of Latchayyapeta sugar plant, the cabinet has decided to call for fresh bids as the bidders have quoted far below the valuation of its assets, he added.

Though the exercise of SPSU privatisation was initiated five years ago, it had not yielded the desired results. This lead to the government's decision to establish an exclusive autonomous body to continue the effort.

Public enterprise reform is part of the Andhra Pradesh Economic Restructuring Project being supported by World Bank and the UK government's DFID. Since 1998, the World Bank has provided a loan of $543 million (Rs 2,500 crore), which will be disbursed over a period of five years. On the other hand, DFID has granted technical assistance amounting to 4.7 million pounds (Rs 31 crore).

As part of the restructuring programme, the Andhra Pradesh government has proposed to initiate and in-depth study of each and every public enterprise and prepare an action plan on how the unit can be made profitable. The proposed units include industrial development agencies, such as APIDC, APSFC etc., Mr Parakh said.

"The independent agencies will prepare asset valuation and business valuation of these enterprises and present before the cabinet", he said.

There are about 40 SPSUs and 60 cooperatives engaged in trading, production and services, which were generating an income of Rs 13,342.43 crore, 12.73 per cent of the gross state domestic product.