NEW DELHI (TIP): The Centre has approved a strategic sale in loss-making Bharat Pumps and Compressors Limited. It comes 12 years after a state-run company — Jessop & Company —was last sold through this route.
The cabinet committee on economic affairs approved “in principle” the strategic sale in the Allahabad-based public sector enterprise, which was set up in 1970.
Strategic sale refers to transfer of management control and ownership. The Cabinet also approved the closure of Kolkata-based Hindustan Cables Ltd, where pro tan Cables Ltd, where production activity stopped in January 2003. The government will pay voluntary separation package to the employees. Cash infusion for the closure of the company is estimated at Rs. 1,310 crore, according to a government statement. So far, the government has cleared the closure of around half-a-dozen sick PSUs while several more are on the list of companies identified for shutting down as they are difficult to revive.
Along with this, the government has also revived the process of strategic sale with the last one being undertaken by the Atal Bihari Vajpayee government in 2003-04 when 72% equity in Jessop & Company was sold to Indo-Wagon Engineering for Rs 18.2 crore.
Since then successive governments have steered clear from strategic sales for fear of triggering controversy over valuation and political and trade union opposition to such sales.
The Narendra Modi government has vowed to push through strategic sales and expects to raise Rs 20,500 crore from this route in the current financial. The overall target from disinvestment is estimated at Rs 56,500 crore which is lower than the previous year’s target of Rs 69,500 crore.
The government had entrusted the Niti Aayog to suggest a roadmap for strategic sale in loss making and other state-run firms. The agency has submitted two reports to the government on the issue. The government is also pursuing strategic sales in some state-run hotels as well. It has decided to shut down 15 loss-making public sector units, of which at least six have now been cleared by the cabinet.