‘Preferential treatment for PSUs in procurement justified’

Arun S Yadav, minister of state for heavy industries, says he is satisfied with the current pace of disinvestment, though many profitable PSUs, like Bharat Heavy Electricals Ltd, are not on the sell-off list. Keen on the revival of sick enterprises, Yadav says his ministry? emphasis is on profitable PSUs lending a helping hand to the sick ones. In a free-wheeling chat with FE?s Sanjeeb Mukherjee & Praveen Kumar Singh, Yadav shares his views on various issues, including corporate social responsibility. Excerpts:

While the finance ministry keeps on adding more firms to the disinvestment list, the proposal on Bhel has not moved forward. Is there a conflict of interest between the finance ministry and the department of heavy industry?

No, there is no conflict of interest. Ultimately, all decisions on disinvestment have to be taken by the finance ministry, but we are surely consulted on issues like the health of PSUs, their operational problems and so on. Overall, we are satisfied with the pace of disinvestment in PSUs. As for a further stake sale in Bhel, the only thing I can say is that it is not on our agenda at present. May be, in the future we may disinvest in that company.

Despite years of groundwork, more than a dozen PSUs are still making losses every year. What are the plans for their revival?

We have three-four models of revival for PSUs and it depends upon the nature of the PSU as to which model will work. For example, for some we can look for a joint-venture partner while for others it could be infusion of funds. The companies are in losses and the idea is to revive them. Hence, the different models are being applied. And, whatever suits the needs of a particular company will be used for it.

As part of the revival package, much emphasis is being laid on profit-making PSUs tying hands with sick ones. A case in point being Hindustan Aeronautics Ltd handing over some contracts to the sick HMT to bail it out. Are there any more proposals like this?

Yes, one big emphasis of mine has been to work out synergies between sick PSUs and profit-making PSUs to see if they can be revived. Some of it can be joint tendering or handing over some work of the profit-making PSUs to the sick, instead of scouting for private firms. There has been some success in that like in the case of Bhel and Bharat Pumps & Compressors Ltd.

It has been found that many a time public sector companies are slack in their corporate social responsibility (CSR) obligations. How does your ministry plan to change that?

We are emphasising on the corporate social responsibility of PSUs. In fact, now it has been made mandatory for all PSUs to contribute a portion of their revenues, based on the annual profit. Under the CSR guidelines, which have become mandatory from the current financial year, a PSU with a net profit of less than Rs 100 crore will have to spend 3-5% of its earnings on CSR. Those earning Rs 100-500 crore a year will have to earmark 2-3% on CSR.

A company with a bottom line of Rs 500 crore and above will have to set aside 0.5-2% on CSR. Apart from that, points will be awarded to them based on their CSR activities during the signing of annual MoUs with the department of public sector enterprises under this ministry.

In fact, we have also linked the remuneration of a PSU head with his/her contribution to CSR activities. And by CSR activities, we mean spending on social development, and should be outside the purview of the work done by them for employees’ welfare. CSR does not include building quarters or playground for the children of employees.

There has been some debate that no preferential treatment should be given to PSUs in public procurement and the policy should be tweaked to enable a level-playing field. What are you views on this?

Well, we have always wanted preferential treatment for PSUs in government procurement as our view is private players can get some leeway and space to operate through manipulation. This is not possible in the case of PSUs as they are accountable to their ministry and to Parliament. Hence they should get preferential treatment in public procurement.