Even though the Left Front government in Kerala has slammed the Centre?s disinvestment policy?which seeks to list all profitable public sector firms ?the state has embarked on its own model of PSU reforms. In fact, the VS Achutanandan government has shortlisted more than 10 profitable state-level public sector firms for merger with bigger state enterprises.
?A proposal to merge companies of similar line of business is under serious consideration. Consolidation will expand the capacity of our companies, reduce overhead expenses, and enable the firms pay their management and employees better,? Kerala government?s principal secretary (industries and commerce) T Balakrishnan told FE. The industries ministry of Kerala has 41 PSEs under its supervision, out of which 28 are profitable.
The government has identified more than 10 firms for mergers in the first phase. ?We have grouped the companies for proposed mergers,? he said. The process will start with the merger of Kerala State Industrial Products Trading Corporation with Travancore Titanium Products Ltd, followed by the merger of Sitaram Textile Mills and Trivandrum Spinning Mills with Kerala State Textiles Corporation.
The state is also waiting for the approval of the corporate affairs ministry for the merger of Keltron Component Complex, Keltron Magnetics, Keltron Crystals and Keltron Resistors. ?The merger can take place within three months from the date of the ministry?s approval. We will also need green signal from the boards of these firms and the high courts,? Balakrishnan added.
The Kerala government has also planned to amalgamate electrical and mineral firms. Travancore Cements and Kerala Clays & Ceramics Products will be merged with bigger firm Malabar Cements, while Kerala Minerals & Metals will absorb Travancore Titanium Products and Travancore Cochin Chemicals. Kerala Electricals & Allied Engineering Company will amalgamate with Tracco Cables and United Electrical Industries.
?We are for amalgamation of our state PSEs. However, the process may take a long time to complete as lot of procedural formalities are involved. In fact, the process can be initiated only with a consensus of trade unions, which is difficult to come by,? another official said on the condition of anonymity.
Commenting on the policy of listing all profitable central PSUs, Balakrishnan said, ?The Centre is disinvesting stake in its PSUs, which is not required. Our model is different. We are funding the enterprises through state budget and, of course, allowing the not so profitable firms to be taken over by the profitable ones.?