Financial Daily from THE HINDU group of publications
Friday, Sep 20, 2002
Industry & Economy
Karnataka sets up new Disinvestment Dept
BANGALORE, Sept. 19
KARNATAKA, which plans to disinvest in or wind up 38 of its PSUs, has gone a step ahead and created a separate portfolio under a Cabinet Minister and a department to speed up the exercise.
It has renamed the nodal Karnataka State Bureau of Public Enterprises - which deals with over 75 State PSUs - and merged it into the new Department of Disinvestment & Public Enterprises Reform. The Law Minister, Mr D.B.Chandre Gowda, holds the disinvestment portfolio, too.
The department is the first such at the State level. It "will now deal with all related matters, take decisions including disinvesting or closure, appointment of advisers and pricing of shares in a focussed and professional manner," Mr Brahm Dutt, Principal Secretary of the department, told Business Line.
As at the Centre, the department will engage consultants to study, evaluate the company brands and assets and advise on the merits of bidders for individual companies that are to be privatised. The 72-strong department may be right-sized to around 50. "We would like to function as lean and mean team at no additional Government spend," Mr Brahm Dutt said.
The PSU revamping exercise which began in 1999-2000 with the setting up of the P. Padmanabha Committee led to a PSU Restructuring Policy in February last year. The committee has identified 38 PSEs which are loss-making or having redundant roles for privatisation or closure in two phases.
The State has also included PSU restructuring under its larger Economic Restructuring Plan funded by the World Bank, with an aid provision of Rs 300 crore to partly bear the cost of revamping.
Mr Brahm Dutt said though the plan was to settle the case of 19 PSEs in the first phase by March this year and 15 are in fairly advanced stages, the process has been bogged down as many of them are BIFR cases or are pending in the court of law. However, GOs have been issued for closure of eight companies and for the privatisation of Mysore Electrical Industries.
A decision concerning the rest is before the State Cabinet.
Meanwhile, Round 2 may be taken up after the Government decides on how many of the 19 enterprises in the second lot are to be privatised. One of them is Karnataka Soaps & Detergents Ltd, which makes the famed Mysore sandal soap. Now in black again, the company has applied to the BIFR for deregistration and consultants and bids will be called after it gets out of the BIFR list.
So far during the current fiscal, Rs 60 crore of the budget of Rs 100 crore for divestment has been advanced for voluntary retirement scheme purposes. Of the 10,774 PSU employees working in 20 units that have implemented a VRS, almost half or 5,423 have been offered the exit option. NGEF alone, where all of its employees have opted out, has hogged Rs 42 crore of this amount. Earlier this year, it was decided to close down NGEF after a third attempt to privatise it through a flexi-package failed to get a good bidder.
Five companies were subsequently added to the phase 1 list: the Karnataka Film Industries Development Corporation, Karnataka Small Industries Marketing Corporation for which orders have been issued for closure; Karnataka Fisheries Development Corporation, Sri Kanteerava Studios and Karnataka State Vinyls Ltd.
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