Only Rs 418 cr needed for turning around 30 PSUs

New Delhi, Nov 23 | Updated: Nov 24 2005, 05:30am hrs
Contrary to the general impression, the revival of under performing public sector companies is not a costly exercise with the Board of Reconstruction of Public Enterprises (BRPSE) coming out with recommendations that have kept the need of infusion of fresh funds to the minimum.

But despite working overtime to formulate the revival schemes, there has been considerable delay in their approval sought by administrative ministries from CCEA.

The board has, therefore, been asking for fast track approval system permitted in the past for the ministry of disinvestment. Lack of timely action would otherwise hurt these companies further.

For the implementation of BRPSEs recommendation on turnaround package for over 30 enterprises, fresh infusion of Rs 418 crore will be required of which Rs 94 crore will go towards funding voluntary retirement scheme for the workers of these companies, sources said.

The board is also of the view that productive employment should be increased after revival, which would eliminate the need for VRS.

The board has also ensured that the companies would return a large part of the funds to the government from the sale of surplus assets in the next 2 to 3 years so that the cash infusion would be in the nature of bridge loan. PTI

The waiver of loan and interest that would be required for revival of the 30-odd companies cleared by BRPSE would be close to Rs 3, 000 crore, while in several cases the government would have to convert small part of its loan and interest totalling around Rs 450 crore to equity, sources added.

As it is the government, which was not getting back its loans from the PSUs, so the waiver would not hit it hard. This would also have been needed if it closed down the companies or decided to sell them to private players.

In case of Hindustan Salts and Bridge and Roof, the Cabinet has already cleared fresh infusion of Rs 7.40 crore and Rs 60 crore.

The revival package for HMT Bearings will require Rs 7.40 crore of fresh funds from the government while for Bharat Wagon this sum would be Rs 25.66 crore, of which Rs 10 crore will be for VRS.

In case of HMT Machine Tools Rs 180 crore would have to be pumped in while in Hindustan Antibotics Limited Rs 80 crore would be required of which Rs 34 crore is needed to fund VRS.

Hindustan Antibiotics had first agreed to sell the surplus land and raise around Rs 62 crore but later decided to set up a biotech park there.

The Cement Corporation will require fresh infusion of Rs 28.67 crore, including Rs 25 crore for VRS while the rest of the money needed for revival will come from sale of seven units.

In case of Central Inland Waterways Corporation, the board has approved a revival plan of Rs 17 crore all of which will be for VRS. Garden Reach Ship Builders are also very keen to take over the Rajabagaon dockyard of CIWTC.

After formulation of revival packages, companies like Bridge and Roof, Praga Tools and Mecon, whose revival packages are awaiting government nod, have already made profits in the financial year 2004-05.

They have also been making profits in the first half of 2005-06, along with others like Hindustan Salts, Eastern Coalfields, HMT, Bharat Bhari Udyog Nigam Ltd, BBJ Construction Company, Braithwaite and Bharat Wagon.

PTI