There are concerns about the slow-down in industrial production in the country, which is only a process of readjustment in the new economic environment. However, to accelerate industrial growth rate, the government is taking various policy initiatives supported by continued reforms in different areas including Foreign Direct Investment Policy, EXIM Policy, Infrastructure development, Information Technology and financial sectors to help industry improve its efficiency, productivity and international competitiveness.

The automotive industry comprising of the automobile and the auto component sectors has shown substantial growth since delicencing of the sector. The turnover of the automobile industry was Rs.44,338 cr. in 1999-2000 compared to Rs.36,000 cr. in 1998-99, registering a growth of 23.11%. However, in the current year 2000-2001, growth levels have come down in this sector. A comprehensive auto policy for development and growth of auto sector is under preparation to address various issues covering this sector.

The PSEs under the Department are engaged in manufacturing, consultancy and contracting activities. Out of 48 PSEs, 12 made profits in (1999-2000) and remaining 36 made losses. The aggregate performance of 48 PSEs has been as under :

* Flash results.

The loss is attributed to shortfall in production of some major enterprises, owing to decline in demand, shortage of working capital, surplus manpower, obsolete plant and machinery, besides increase in the cost of inputs etc.

Details of production, profit/loss, order book and Exports are given in Ann – III, IV, VI & VII.

Salary/Wage bill and social overheads as percentage of turnover is given at Ann – V. Value added per employee and value added per rupee of wage paid are indicated at Ann – VIII.

Strategies have been re-oriented for restructuring the PSEs for improving their competitiveness and long term viability. The aim is to restructure and revive potentially viable PSEs, close down PSEs which cannot be revived, bring down Government equity in all non-strategic PSEs to 26% or lower, if necessary, and fully protect the interests of the workers. In this process, following actions for restructuring of PSEs are in hand;

• Revival of PSEs through the BIFR;
• Financial Restructuring wherever appropriate;
• Joint Venture formation to have continuous access to technology, finance, marketing, management etc.;
• Manpower rationalization

Out of 48 PSEs, 27 have been referred to BIFR. In case of 12 PSEs, revival plans have been sanctioned by BIFR and are under implementation. These revival plans involve fresh infusion of funds by Govt. of India to the extent of Rs.637 cr. and financial restructuring of Rs.2063 cr.

The status of the 27 PSEs referred to BIFR is as under :

* Posted profits in 1999-2000.

Apart from revival plans sanctioned by BIFR, Govt. on its own have approved restructuring plans in case of following PSEs :

1. Hindustan Cables Ltd. (HCL)
2. Andrew Yule & Co.Ltd. (AY & Co.)
3. Nepa Ltd. (Nepa)
4. Hindustan Paper Corporation Ltd. (HPC)
5. Praga Tools Ltd. (PTL)
6. HMT Ltd. (HMT)

These restructuring plans include financial, business and organisational restructuring on a case to case basis.

Some of the restructuring initiatives already taken include;

• Sale of Damodhar Cement & Slag Ltd., a subsidiary of Cement Corporation of India Ltd. (CCI) to M/s Associate Cements Co Ltd. (ACC) in 1996.
• Sale of Yerraguntla Plant of CCI to India Cements Ltd. in 1998.
• Conversion of Belting Division of Andrew Yule & Co. (AY & Co.) into a Joint Venture company with M/s Phoenix of Germany as the partner holding 74% of the equity with balance of 24% with AY & Co.
• Conversion of Lagan Jute Machinery Co.Ltd. (LJMC), a subsidiary of BBUNL into a JV and transfer of management of the company to JV partner in July, 2000.

In addition, after the formation of Department of Disinvestment, cases of 15 PSEs of DHI have been referred to them for undertaking disinvestment/ JV formation.

Government have been supporting viable and credible revival plans. There are some PSEs which were considered unviable by BIFR/Expert Agency. Govt. considered various options and constituted an Expert Group to examine the possibility of revival of these units. After carefully considering the recommendations of the Expert Group, PSEs present status and deliberating on the utility of repeating earlier efforts that had been adopted for revival through various options, it was decided to take action for closure of such PSEs listed below:

1. Bharat Process Mechanical Engineers Ltd. (BPME)
2. Weighbird India Ltd. (WIL)
3. Tannery & Footwear Corpn. ltd. (Tafco)
4. Rehabilitation Industries Corp. (RIC)
5. National Bicycle Corpn. of India Ltd. (NBCIL)
6. Mining and Allied Machinery Corpn. Ltd. (MAMC)

Permission for closure has been granted by the ‘Appropriate Authority’ in case of two of the above PSEs namely WIL & RIC. Cases of remaining PSEs are under process.

As a safety net, Govt. introduced a Voluntary Separation Scheme (VSS) providing benefits equivalent to VRS in order to minimise hardship caused to the workers of these PSEs. Benefits under VSS are much higher than the compensation under the ID Act. An amount of Rs.230 crs. has been provided by the Govt. as budgetary support for these PSEs in 2000-2001.

Besides the six PSEs mentioned above, permission for closure of unviable units of HMT Ltd and loss making refractory units of Burn Standard Co.Ltd. (BSCL) has also been granted by the Appropriate Authority. In one more case of Mandya National Paper Mills (MNPM), Karnataka High Court have issued an order on 20.10.2000 for winding up of the company.

BHEL is one of the Navratnas. The Board of the Company has been strengthened by induction of qualified professionals from outside. Greater freedom has been given in respect of capital expenditure, formation of strategic alliances and formulation of HRD policies.

Voluntary Retirement Scheme (VRS) has been introduced in a number of PSEs of this Department to shed surplus manpower without causing undue hardship to the workers. About 41,000 employees opted for VRS during the eighth year period 1992-93 to 1999-2000 involving an expenditure of about Rs. 800 crores.

The Department has also been encouraging issue of bonds by PSEs to the FIs/Banks/Institutions/Public against Govt. guarantee for meeting the expenditure on VRS.

With a view to giving greater autonomy to the public sector enterprises, at the same time making them accountable for achievement of their objectives, the concept of MOU has been accepted and implemented by the Government. For the year 2000-2001, 8 PSEs namely, Bharat Heavy Electricals Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam Ltd., Hindustan Cables Ltd., Andrew Yule & Company Ltd., Engineering Projects (India) Ltd., HMT Ltd. and Hindustan Paper Corpn. Ltd. signed MOU with the Govt. of India.

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