Need to learn lessons from disinvestment, success stories, says new doctor for sick PSUs

Set up by the UPA to assure the Left about its “commitment” to PSUs, the BRPSE did little to reform sick PSUs but threw away thousands of crores in write-offs and waivers and recommended just one of the 51 PSUs it examined for closure — under its first boss Prahlad K Basu.

When The Indian Express had first asked him what he thought of the NCMP which allows for winding up PSUs where revival is not feasible, Basu had said, “To sell a second-hand car, you need to fix it first. The authors of the NCMP had no clue what they were writing.”

Moreover, the BRPSE met erratically and meetings’ minutes gathered dust for months even as the Ministry of Heavy Industry and Public Enterprises fretted and fumed.

By contrast, in just two weeks after taking charge on November 30, Sengupta, who was the Controller of Capital issues when Prime Minister Manmohan Singh was Secretary (Economic Affairs), has already held one introductory meeting and has suo motu called for examining Heavy Engineering Corporation, a PSU that has been sick since inception.

Sengupta, who had also headed the Committee on Restructuring PSU oil companies in 1997-98, is a strong believer in deregulation and has a pragmatic take on the public sector: “The number of chronically sick units are not too many now — some were put up at a time when protection was assured. There’s no doubt that they should be able to pull up their socks but in that process, they may need to discontinue some existing activities and diversify — sometimes induct a private partner without sacrificing the government’s majority shareholding.”

Sengupta had a long chat with the PM last Thursday and discussed the mandate for his new job. “We shouldn’t concentrate only on financial restructuring but basic operations need to be fixed or diversified. Real estate is a big business and all PSUs are rich in land assets. There’s no point sticking with your original product if there’s no market — in a business’s history, course has to be changed often. If Azim Premji would’ve stuck to his family business, he wouldn’t have been where he is,” he says.

“There are many success stories in PSUs — NTPC, BHEL are stock market stars today, while the National Building Construction Corporation has turned the corner. When we consider a sick PSU, it would help to place it alongside these or the disinvested PSUs that have done well — there are lessons to be learnt,” Sengupta points out.

The first company he will look at – the National Jute Manufacturing Corporation, whose revival proposal will be taken up in the Board’s second meeting under him on Wednesday.

Incidentally, the government had set up a National Investment Fund in 2005, where disinvestment proceeds were to be invested and used for reinvesting in ailing PSUs as well as to fund social sector development projects. Now, though election year is approaching and the government’s emphasis on aam aadmi programs is likely to go up, the NIF still has only Rs 1,000 crore.

Meanwhile, most companies that the NDA had disinvested have not just come out of the woods, but are a force to reckon with — in the global arena. The Indian Express tracks their growth post-disinvestment in a series that starts today.