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Thursday, July 19, 2018

Under Congress pressure,govt to reverse PSU sale

UPA govt has decided to abandon the strategic sale of loss-making public sector firm SIL

Written by D K Singh | New Delhi | Published: July 2, 2012 2:01:28 am

Under obvious pressure from the top leadership of the Congress,the UPA government has decided to abandon the strategic sale of loss-making public sector firm Scooters India Ltd (SIL) based in Lucknow. Instead,the government has prepared a Rs 202-crore revival plan which is expected to be taken up by the Cabinet soon,top government sources said.

The Cabinet had cleared the disinvestment plan in May 2011. But ahead of the Assembly elections in Uttar Pradesh earlier this year,the Congress had gone on an overdrive to prevent SIL’s disinvestment with party president Sonia Gandhi herself speaking to Heavy Industries and Public Enterprises Minister Praful Patel,the sources said. UP Congress chief Rita Bahuguna Joshi had also spoken to Patel and led a delegation of SIL employees to meet Prime Minister Manmohan Singh.

On the other hand,sources in the Samajwadi Party said the ruling party in Uttar Pradesh was in favour of disinvestment of SIL and had even discussed this with Patel. Senior SP leaders feel that with an auto giant like Mahindra & Mahindra evincing interest in SIL,the stake sale would have helped push UP as an investment destination.

Patel could not be reached for comment.

Since its inception in 1972,SIL has been incurring losses,except for a five-year period starting 1996-97 when it made profits. Its performance,however,deteriorated and it started incurring operational losses from 2002-03 even after the implementation of a revival package from the Board for Industrial & Financial Reconstruction (BIFR). SIL has been unable to pay salaries and other dues to its employees. In 2008-09,its net worth was fully eroded and the company became sick.

In fact,at a meeting to consider the revival plan made by SIL in July 2010,the Board for Reconstruction of Public Sector Enterprises (BRPSE) said the outlook for SIL was “dismal”. “The Board felt that unless a strategic partner was selected to operate the company,it was not possible for the company to turnaround due to technology and skill gap among the present staff of the company. The Board,therefore,recommends that a last serious effort should be made to identify a possible joint venture partner for revival of the company. Alternatively,the company has to be closed down,” the BRPSE had said.

The proposed revival plan,to be implemented over five years,includes an infusion of Rs 70 crore as equity by the central government for capital expenditure; Rs 20 crore for working capital,of which Rs 15 crore would be central government equity and Rs 5 crore central government loan; conversion of a non-Plan loan of Rs 83 crore into equity; waiving of interest,and enhancement of superannuation age from 58 to 60 years,among others.

In May last year,the Cabinet had approved the proposal to sell the government’s entire stake of 95.37 per cent in SIL by roping in a joint venture partner. However,following the intervention of the Congress leadership,the Prime Minister’s Office in August last year informed that the Prime Minister “has desired that Ministry of Heavy Industries may look into the matter and re-examine the issue”,the sources said.

The case was subsequently reconsidered and the government decided to withdraw the resolution introduced in Parliament in the monsoon session for authorising the government to identify and induct a strategic partner through the department of disinvestment for SIL. The heavy industries ministry went on to produce a revised revival proposal for SIL after a joint study by SIL and the Automotive Research Association of India,Pune.

“We have been working on this for a long time. The three-wheelers they produce are very much in demand. The government has the responsibility of saving PSUs. It (SIL) involves huge land. Anybody who buys it will get it for a song and then retrench workers. I am sure SIL is viable. If it can survive,why sell it?” Rita Bahuguna Joshi told The Indian Express.

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