PSU board asserts mandate beyond sick cos

Written by Vikas Dhoot | New Delhi | Updated: Dec 30 2008, 06:00am hrs
Four years of its inception to modernise, revive and restructure public sector enterprises, the Board for Reconstruction of Public Sector Enterprises (BRPSE) is trying to assert that it is not just about reviving sick PSUs but is the nodal body that all PSUs have to report to whether they are expanding capacity or entering a new joint venture.

The government replaced the BRPSEs previous chief, Prahlad K Basu after a sustained disagreement between minister for heavy industries and public enterprises Santosh Mohon Dev. Basu had granted generous revival packages with loan waivers to almost all the sick PSUs that approached the Board.

Since former revenue secretary Nitish Sengupta took charge of the board last December, the BRPSE has been sprucing up its act. Most of 2008, the BRPSE was busy making PSUs aware of its true mandate and making them pay the Board pay more heed.

Set up by a resolution of the Government of India in December, 2004, the BRPSE is mandated to "undertake strengthening, modernising, reviving and restructuring of PSEs" and also advise the government on strategies, measures and schemes related to the PSEs.

But the fact has been that BRPSE is seen as a Board that is supposed to take up cases of sick PSEs only even after the Prime Minister Manohan Singh had announced the setting up of the Board and defined its role.

Ruing over this fact, secretary, BRPSE, J S Maini told FE "There is this misconception about BRPSE that it is meant for sick PSEs. No where in the resolution such a thing is mentioned. In fact, all PSEs have to inform the Board about all its activities including their decision to announce initial public offer, going for a joint venture (JV) or merger."

The resolution clearly states in the terms of reference for the Board that it would advise the government on ways to strengthen PSEs "in general" and "consider restructuring financial, organizational and business (including diversification, JVs, seeking strategic partners, merger and acquisition)" of PSEs. The Board would also suggest means to fund such schemes.

Taking strong objection to the activities of the profit making PSEs who have been bypassing the BRPSE till now, the Board has written letters to almost all the PSEs asking them to explain and justify their action. In response, couple of big ticket PSEs has said that they were unaware of the existence of the Board, while some others said they thought it was just meant for the revival of sick PSEs and informing their respective administrative ministries about their expansion plans was enough.

As per the new action plan of BRPSE, the Board would send reminders to the PSEs who are yet to respond to the letters and the response would be circulated to all the seven members of the Board including the chairman and the secretary for further action.

To make things easier, the Board has suggested organising the PSEs in order of the sectors they belong to, priority given to PSEs in the energy, power, oil & gas and steel and iron sector followed by PSEs like State Trading Corporation and MMTC who are in the trading sector.

The Board would review all the cases that have been through it over the last two years and make presentations to the Board on the present status of the PSEs. It would also prepare a flow chart and ask at least two PSEs to make presentations before the Board every month. The presentations would be made by the top officials of the companies. The PSEs would also have to appraise the Board about their quarterly performance following which they would be given copies of the quarterly performance report. The minutes of the presentations would be sent to the Prime Minister's Office, cabinet secretary and the concerned ministry.

Maini, who has taken over as the secretary of the Board in October last year, has even written to the Planning Commission asking the government's think tank to involve the Board at the stage when the Commission decides to set targets and define roles for PSEs, particularly in the infrastructure sector.

Chairman of BRPSE Nitish Sengupta said that the number of sick PSU cases pending with the Board has almost halved to around 30-35 in the last four years with most of them showing signs of turn-around.

To further expedite the process of turning around the sick and loss making PSEs, the Board would be meeting twice every month starting next month, Sengupta informed.

He pointed that financial condition is not the only reason for the sickness of a PSE. There are other important issues like "product portfolio, if they are in tune with the needs of the market and if any product diversification is needed, technology, marketing strategies and human resource issues. The Board would look at all these before suggesting the revival package for the sick units," he said, adding that the Board would also assess the land held by the units in case it can be used for its revival.