The Hindu : Govt. charts reforms package for industrial units

Online edition of India's National Newspaper
Monday, Oct 21, 2002

Southern States

Southern States - Kerala

Govt. charts reforms package for industrial units

By Girish Menon

THIRUVANANTHAPURAM OCT. 20. The Government has already set the contours of the restructuring of the 11 units it has notified.

Astral Watches: In the case of Astral Watches Ltd., fully owned by the KSIDC, the Government has asked the KSIDC to conduct an asset evaluation and sell excess land owned by the company, which has been non-operational since 2001.

The KSIDC would be permitted to sell off the excess land as soon as the Government approves the RIAB package. An employee separation scheme as per the existing guidelines would be implemented to accommodate 50 per cent of the work force identified as redundant. The funds mobilised through sale of assets would be utilised to pay off statutory dues worth Rs. 8 lakhs, and Rs. 64 lakhs as loan from KSIDC. The company laid would laid off till private promoters, including NRIs, are located.

Kerala Ceramics: In the case of the Kerala Ceramics Ltd. (TKCL), outright sale of the Kaolin division has been ruled out in view of the rich clay deposits in southern Kerala, but the Government would disinvest gradually.

The Government would initially retain 74 per cent of the TKCL equity and make the strategic partner part-finance the cost of restructuring. Management control would be given to the incoming partner on the basis of the initial investment. The Government would bring down its holding in TKCL to 26 years in three years time.

TKCL's porcelain unit would be closed down and Rs. 2 crores the Government has released to the unit would be utilised for the Employee Separation Scheme. The Government would also provide the Rs. 2.5 crores needed for closing down the porcelain division, but this would be later recouped from the sale of surplus assets. The proceeds from the sale would be utilised to service dues to the KSEB.

Trivandrum Spinning Mills: The Government has announced that it would close down the Trivandrum Spinning Mills in the backdrop of the failure of the BIFR-backed rehabilitation package. The unit has been non-operational since 1998. The assets of TSM would be sold to part-finance the cost of closure, which includes an employee separation scheme.

Kerala Soaps and Oils.: The assets of Kerala Soaps and Oils Ltd. would be sold to recoup the cost of closure, including settlement of dues to the KSEB, and sales tax dues. The company owes the Government Rs. 35 crores, and Rs 1.4 crores to the State Cooperative Bank.

Kerala State Drugs and Pharmaceuticals: With regard to the Kerala State Drugs and Pharmaceuticals, the Government has decided to hand over the formulation division to the Health Department as the unit's operations are linked to it. The vitamin A division would be hived off and sold to the private sector promoter. The proceeds of the sale of unused surplus assets, mainly land, would be used to part-finance the cost of restructuring short term finances, and current liabilities in the two divisions.

In fact, the Government order does not offer much option to the KSDP as dues of the Vitamin A division to the KSEB would be settled at energy charges, while the sale proceeds of KSDP from the Health Department would be utilised to pay up loans from Government agencies which have taken recourse to legal action following default in repayment.

The Government order also has a proviso that the formulation unit would be offered for sale at a later date or wound up if the current restructuring process were to fail.

Kerala Salicylates and Chemicals: With regard to Kerala Salicylates and Chemicals Ltd., the Government has decided to privatise the unit outright especially since the unit has been technically found viable under the UNDP project. The government hopes to hand over the unit to a promoter experienced in the chemical or pharmaceutical industry.

Sitaram Textiles: As far as Sitaram Textiles is concerned, the Government proposes to fund its restructuring programme through the sale of excess land. The sale proceeds would be used to pay off current liabilities of the spinning division and restructure short-term finances.

The company's processing facility would be handed over to the private sector promoter. The Government has made it clear that it would sustain the mill's operation till a private sector investor could be attracted for modernisation once the textile sector looks up.

Autokast: In the case of Autokast, once upon a time a most-favoured PSU, the proposal is to restructure the company prior to putting it up for privatisation. Further budgetary support for cash loss funding would be stopped and as a transition phase management strategy, assistance from the Kerala Industrial Revitalisation Fund Board, which has been a major source of working capital, would be continued, on condition that the company would not incur further operating losses.

The Power Department would ensure continuous supply subject to the condition that Autokast pays energy charges at prevailing rates. On privatisation, the power charges would be frozen at the then prevailing rates for a period of five years.

Kerala State Detergents and Chemicals: The Kerala State Detergents and Chemicals Ltd, Kuttipuram, would be restructured through the sale of excess land prior to the privatisation of its infrastructure facilities.

Four acres of land would be set apart for the detergent manufacturing facility which would be offered to the private sector. One acre would be set apart for the implementation of lime manufacturing scheme proposed by the KSIDC and accepted by the KMML.

The unit would accommodate 30 personnel and would be registered as a SSI. If the company fails to attract promoters, it would be wound up.

Travancore Plywoods Industries: With regard to the Travancore Plywoods Industries, the Government has proposed outright privatisation as the company does not possess the funds to meet the huge cost of closure. Settlement of dues to KSEB may be made by freezing the liabilities at energy charges. Sale of excess land would be permitted to part-finance the reform programme.

Kerala Textile Corporation: The restructuring of the Kerala Textile Corporation would be done by delinking the four units under it. the Malabar Spinning and Weaving Mills would be closed down, while the Kottayam Textiles Ltd would be posed for privatisation.

The process of the sale of Malabar Mill and the proceeds from the privatisation of the Kottayam mill would be used for restructuring the Prabhuram Mills and Edarikode Textiles at this stage. Improvement and replacement of machinery would be made to improve the productivity and efficiency of these two mills. Later, these two mills would be put up for privatisation.

Earlier, the Kerala Government had notified Keltron Counters for restructuring, which included a voluntary retirement scheme, and sale of certain assets.

Printer friendly page
Send this article to Friends by E-Mail

Southern States

Stories in this Section

Antony assails banks' 'negative attitude'

UDF sets off on a difficult route

Govt. charts reforms package for industrial units

VS visits sinking plantations

Their tales of woes