The Hindu : State 'in no hurry to restructure loss-making PSUs'

Online edition of India's National Newspaper
Tuesday, Jul 29, 2003

Other States

Other States - Maharashtra

State 'in no hurry to restructure loss-making PSUs'

By Mahesh Vijapurkar

MUMBAI JULY 28. Maharashtra, saddled with many loss-making public sector undertakings (PSUs), has not been following the recommendations of the Maharashtra Board for Restructuring State Enterprises, on restructuring at least seven companies. This has raised doubts about the Government's intentions. Though the MBRSE's recommendations are binding on the Government, no movement has been seen, official sources said.

In its latest report, the Comptroller and Auditor-General of India has not taken kindly to the State Government's delays in dealing with the PSUs and has said that the performance of some 32 companies must either be improved or closed down. Save one, all companies are habitual loss makers while one firm, SICOM — categorised as a non-banking finance company — had divested 51 per cent of its equity but that was before the MBRSE was set up. Now, the MBRSE "is only an intent of the Government not in the least reflected in action", the sources said.

It will not be surprising, if the MBRSE Chairman and a former Chief Secretary, Sharad Upasani, due for superannuation in end-September, retires without seeing any of the proposals being implemented. Of the cases referred to it, the MBRSE has made specific recommendations but most of them, the sources said, had not even been taken to the Cabinet for discussion. None of the MBRSE's references can be withdrawn as the statute prevents such backtracking, but the Government has chosen to sit on the recommendations.

According to the CAG, the State has 61 PSUs, 43 of which are working and 18 non-working, apart from five statutory corporations such as the Power Board and the State Road Transport Corporation. Interestingly, after the MBRSE was set up to help the Government deal with the struggling PSUs, it chose to set up one more — the Maharashtra Cooperative Development Corporation, to help leverage funds for the cooperative sugar factories. Apparently, the Government is "not inclined to close these undertaking under the pretext that jobs would be lost". And, "we are getting closer to elections".

The investment in the 43 PSUs by the end of 2001-02 was Rs. 647 crores towards equity and a loan burden of Rs. 4,418 crores. Most of the PSUs have Government guarantees to the financial institutions that have given the funds.

By end of 2001-02, only three firms earned an aggregate profit of Rs. 18.71 crores but did not declare any dividend. According to figures available with the CAG, 13 of the 26 loss-making PSUs had accumulated losses of Rs. 668 crores or twice their total paid up capital.

But despite "the poor performance", the Government "continued financial support" by grant of equity, loans, conversions of loans into equity etc.

Despite being cash-strapped, the implied subsidy to the PSUs grew from Rs. 54 crores in 1985-86 to Rs. 1,140 crores in 1997-98. The Government's total financial involvement was Rs. 19,186 crores.

Many of the entities do not even go in for requisite auditing and publish their accounts indifferently, and the Legislature often turns a Nelson's eye. Virtually, each one of them has a negative worth but the Government seems to be in no hurry to mend matters.

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

Other States

News Update

Stories in this Section

'Kumbh Mela' site inundated

State 'in no hurry to restructure loss-making PSUs'