The revival plan envisaged by a government appointed committee for sick public sector units, which is based on the support by their profitable counterparts, hangs in balance since the latter are not keen on extending any such lifeline.
A committee headed by NTPC chairman Arup Roy Choudhury submitted a report earlier this month advocating involvement of some profit-making central public sector undertakings (CPSUs) in aiding the revival of the sick ones. The report has been submitted to the ministries of public enterprise and heavy industries.
“The companies on whom the revival plan rests are not very keen on the proposal as they are unsure about its feasibility,” a government source told FE.
The report that draws heavily from similar plans in countries like Russia and China proposes formation of an asset restructuring company (ARC) with the help of capital from CPSUs sitting on a pile of cash. According to estimates, profit-making CPSUs have a cash pile in excess of R1.6 lakh crore.
ONGC, NTPC, Fertiliser Corporation, Coal India and Bharat Heavy Electricals are among the top profit-making CPSUs. On the flip side, BSNL, MTNL, Air India, Chennai Petroleum and Hindustan Photo Films are the top five loss-making CPSUs.
According to the committee’s report, the ARC will be managed by a professional management team that would be drawn from both the public and private sectors, and the body will have the discretion to decide on revivable units and take only those units on board. These sick units will act as subsidiaries of the umbrella holding body of the ARC. The companies that put money in the ARC will get a proportionate share of profit if and when the sick unit start earning it.
The decision to divest the subsidiaries from the parent body (ARC) will be taken according to parameters to ensure that the revived units do not fall back into the rut. The proceeds from the divestment will again be shared among the stakeholders of the ARC.
As per the official definition of a sick company — a unit with annual accumulated losses exceeding half its net worth — there are 61 sick CPSUs.
Sumit Jha | The Financial Express