Armed with a stronger political mandate, the new government is planning to kickstart the stalled disinvestment programme of central public sector undertakings.
Officials, who did not wish to be identified, said a disinvestment policy articulating the need for companies to raise capital without affecting the shareholding pattern of majority government-ownership is in the works, and could form part of finance minister Pranab Mukherjee’s budget speech.
An official confirmed that at least two public sector companies – Hindustan Cables Limited (HCL) and Hindustan Photofilms Ltd (HPL) — could be among the first off the blocks in the new disinvestment programme.
HCL makes telecommunication cables. It has three units – one each at Rupnarainpur, (West Bengal), Hyderabad (Andhra Pradesh) and Allahabad (Uttar Pradesh).
Indian Institute of Technology (IIT) Kharagpur and Tata Consultancy Services (TCS) were engaged by HCL to conduct a study for restructuring the sick company.
The Board of Reconstruction of Public Sector Enterprises (BRPSE) had recommended locating a joint venture partner for reviving HCL either from public or private sector enterprises or complete disinvestment of the firm to clean up the balance sheet.
“Two potential proposals from MMTC Limited and Rashtriya Ispat Nigam Limited (RINL) are being examined and pursued for developing a concrete proposal on mutually agreed terms for revival of HCL,” an official, who did not wish be identified, said.
There are 214 operational centrally-owned public sector companies, of which only 160 are profit making; 54 are in the red. Of the 160, only 99 have a positive net worth, while 48 have negative net worth despite clocking profits. Half of the 99 positive net-worth profit making companies require capital for expansion and to stay competitive, officials informed.