Financial Daily from THE HINDU group of publications
Friday, Oct 10, 2003
Industry & Economy
Divestment of Karnataka Soaps, 2 more PSEs soon
Bangalore , Oct. 9
THE privatisation process of Karnataka Soaps & Detergents Ltd, maker of the classic Mysore Sandal soap, will be set in motion shortly along with two more State public enterprises.
The Department of Disinvestment & State Public Enterprise Reforms is scouting for an adviser each for these companies and will shortly advertise for them, said Mr Brahm Dutt, Principal Secretary of the Department.
The current plan is to have the advisers in place by mid-November and complete the three cases during the current fiscal year, Mr Brahm Dutt told Business Line.
KS&DL, Mysore Electrical Industries and Karnataka Vidyut Karkhane (KaViKa) have been shortlisted by the Karnataka Government for disinvestment by April 2004. In the case of the Rs 150-crore KS&DL, the Government decided in July last year to offload 74 per cent of the equity in favour of a private sector buyer and pay Rs 10.85 crore towards voluntary retirement of its staff.
The three companies have made marginal profits and have undergone some amount of rightsizing of staff: a total of 447 employees in the three units have opted for VR. That leaves KS&DL with an employee force of 1079; MEI 371 and KaViKa with about 340.
The three State PSEs are among the 39 units identified by the State Government under its ongoing Public Enterprises Reforms Programme. 11 of the 20 companies taken up in Phase 1 have been issued closure orders. The PE reforms exercise is part of the World Bank-aided Economic Restructuring Programme that began over two years ago and is now into Phase 2 with 19 companies.
Mr Brahm Dutt said significant progress has been made in Phase 2. Decisions have been taken in the case of three loss-making companies that have badly eroded networths: Karnataka Agro Industries Corporation has been ordered closed and the defunct company will get Rs 35 crore towards VRS of all 648 employees. Karnataka Silk Industries Corporation, a BIFR case until August this year, has four factories and a large workforce of over 1,500. The company is getting revamped with Rs 20-crore VRS package for 600 employees of the closed Channapatna and Kanakapura units and revival of the Mysore and T. Narsipur facilities.
It was recently decided to privatise Mysore Minerals Ltd, Mysore Paper Mills and Kanteerava Studios have been recommended for privatisation.
NGEF, Karnataka Telecom, Mysore Lamps, Karnataka State Textiles Corporation and Mysore Acetate & Chemicals Ltd have been BIFR cases. Assets of over Rs 500 crore have been locked up with closed companies. Mr Brahm Dutt said, "Our priority now is to privatise (the identified) units and expedite the cases in courts so that the assets are unlocked and disposed of. We are following up with the High Court for the appointment of liquidators and to pay back the creditors."
The 39 marked PSUs have together identified a total of 28,000 employees as surplus and exit schemes for them would demand an aid of Rs 1,200 crore by the deadline of April 2006. Between 2001-03, the World Bank has disbursed Rs 270 crore for footing the VR bills of various companies, while budgetary support for the defunct public enterprises has disappeared. VR schemes for this year alone would amount to Rs 150 crore as each of the companies is large.
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