Public sector in a better position than before

Nitish Sengupta, chairman, Board for Reconstruction of Public Sector Enterprises, which is mandated to examine cases of sick CPSEs and recommend their revival or closure, comes across as a strict financial disciplinarian while talking about challenges involved in reviving sick enterprises. This quality seems to have come in handy for him in the current job. He did not hesitate from suggesting sweeping changes in business model of some sick PSUs when he realised that the existing models were not aggressive enough to ensure the units’ financial viability. The BRPSE is also mandated to monitor emerging sickness in CPSEs. Excerpts...

Are you satisfied with the success achieved in the revival of sick CPSEs?

Out of the 248 CPSEs, 67 have been referred to the BRPSE. We have received proposals for 62. Of these, we have recommended the revival of 59 and closure of three CSPEs. Of the 59 cases where we have recommended a revival, the government has approved financial packages for 45, of which 24 reported profit in the year 2010-11. As many as 13 companies have been conferred the BRPSE ‘Turnaround Award’ for posting profit in three consecutive years. While Hindustan Copper and Konkan Railway Corporation were bestowed the award this year, Bharat Coking Coal and National Film Development Corporation appear as likely candidates for the award next year.

What is on your table right now?

We are going to consider case of BSNL, MTNL and Indian Telephone Industries (ITI) in the next meeting on November 29. We have written to these enterprises to come out with all facts and figures. We will see why have they fallen sick and what can be done to bring them out of that state. Merger is a possible solution. We are also going to examine causes of emerging sickness in Central Cottage Industries. The company has reported loss for two consecutive years. The BRPSE board has asked the company to submit a comprehensive proposal for revival. We are also examining case of HMT.

Do you think that ITI can be revived?

Yes. See there was a time when Mecon, a construction company, was entirely dependent on SAIL for business. It used to bid for SAIL projects only. It became sick. Now it is bidding for others' projects too and doing well. Heavy Engineering Corporation has also benefitted from a similar shift in business model. ITI too can also go out and sell products to other companies.

Are you satisfied with the performance of the public sector?

The impression that the public sector as a whole is not doing well is incorrect. The number of sick units is going down while the number of revived units is going up. In fact, during the 2008 global economic crisis, the Indian public sector remained a shining example of reconstruction, revival and profitability. They did not cut down on production. Nor did they retrench employees like the private sector. In fact, they hired more people to support higher production. The public sector today is in a better position than ever before. That is because we made them to stick to the discipline of balance sheet.

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