Loss making entities may get one last attempt at strategic sale before closure

New Delhi: Union Minister Prakash Javadekar during a press conference on completion of 100 days of the Modi Government, in New Delhi on Sep 8, 2019. (Photo: IANS)

New Delhi, March 3 (IANS) The government may make one last attempt next fiscal to sell more than two dozen sick and loss making entities that have failed to secure investor interest in earlier rounds of strategic sale. Failing this, these enterprises that have eroded their net worth, would be closed and their assets including land would be sold in parcels.

Sources said that the ministry of heavy industries, that administers several of these sick and loss making entities, will be tasked to provide a revised list of public sector enterprises that can be put up for strategic sale, some for another attempt, to the disinvestment department DIPAM that will chart out the roadmap for their sell off.

If such companies do not elicit a response from investors even in the earlier stage of the disinvestment process, the process may be ended and the company will be put up for closure. The government will also take up companies from an earlier list of over 30 entities approved for strategic sale by NITI Aayog for closure if it fails to elicit investor interest.

The department of public enterprises (DPE) is finalising revised guidelines for timebound closure of loss-making central public sector units (CPSEs) and disposal of their assets. These guidelines would be applied for closure of the units after attempts for their sale fail. The guidelines would first be approved by the cabinet.

The guidelines would allow for delinking land holdings from the process of closing the PSU, that would then be transferred to the administrative ministry for further action. Such land parcels could be sold for industrial development by the corporate sector. Some of the land parcels could also be developed as industrial clusters.

A case in point here would be Scooters India which is already facing a legal dispute over its land with the Uttar Pradesh government. In the event the government decides to place the company again for strategic sale, and no buyer turns up, the company may be wound up and closed while its huge tracts of land would get transferred to the heavy industries ministry. The ministry could then take up the case with the UP government and find alternate use for this land.

Other sick PSUs that may benefit from such an approach are Hindustan Fluorocarbons Ltd., Bharat Pumps and Compressors Ltd. and Hindustan Prefab Ltd.

The government has a list of about 34 PSUs that have been given ‘in principle’ approval, some of which are still pending strategic disinvestment. These include companies such as Scooters India, Bridge and Roof Co., Cement Corporation of India, Ferro Scrap Nigam, Pawan Hans. The disinvestment process for a few such as Air India and BPCL is ongoing while THDC and NEEPCO has been taken over by NTPC.

“With a pick-up in economic activity in FY22 these could be of interest for some of the sick and loss making entities among the investors. The government would like to test strategic sale of these units again. If they fail to pass muster, closure and liquidation of assets would be done,” said a government official privy to the development.

In FY19, about 70 loss-making CPSEs caused an over Rs 31,635 crore loss to the exchequer. Faced with the problem of losses the government has also closed over 20 such entities including HMT Watches Ltd, Indian Drugs and Pharmaceuticals Ltd, Hindustan Fluorocarbons Ltd. between August 2013 and March 2020.

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