Central Public Sector Enterprises are created to spur specific industrial growth.They are known for high salaries, less proportionate of work and job security, a perfect mix suitable for India’s ever-growing young and ageing population. It can be said that CPSEs are best to bring innovation, competition and development of industrialisation in initial stages. Like Air India being the pioneer of air travel, BSNL for its spread of telephone and mobile service and Bharat Broadband Limited for last mile fiber optic connectivity. Due to fiscal discipline era, the government expect profits from every single CPSEs along with the vision of fulfilment of the cause. Jaitley, India's finance minsiter pointed out that capitalism driven India after 1991 doesn’t need CPSEs in industries like tourism, pharma, aviation, textiles etc. But in future India will mull CPSEs to develop industries related high-speed transit, electric cars, solid waste management, river cleaning etc.
In Part I, we featured the downfall of CPSEs namely Air India, PEC Ltd, Hindustan Organic Chemicals, Indian Drugs and Pharmaceuticals Ltd and Fertilizers and Chemical Travancore Ltd. The organisations incurring loss are not able to reconstruct themselves in the era of competition, innovation and automation. It is likely to note that only a few CPSEs from Maharatna, Navratna and Mini-Ratna series are in losses. The BJP-led NDA government is all set to embark on its strategic disinvestment programme by 2018. NITI Aayog’s proposal for shutting down 17 sick or loss-making government companies has received the go-ahead from Prime Minister’s Office (PMO). The second set of proposals from the Aayog for strategic sales aimed at reducing government ownership to below 51 percent in about 22 public sector companies has also got the green signal from the PMO. Let’s take a look at major loss making CPSEs.
Bharat Sanchar Nigam Ltd & MTNL
BSNL connected India. It was created by Department of Telecom in September 2000 to spread last mile connectivity of telephone and mobile services across India. BSNL is a major promoter of the BharatNet project, an ambitious plan to connect more than 2,75,000 lakh gram panchayats across India. The potential of high-speed internet through fibre optics is immense. Digital economy, if rightly used can triple India’s GDP in few decades. BSNL is making losses because it spends more in the economy which earns less.
After 2002, as the mobile-phone revolution spread, BSNL's landline subscriber-base fell from 33.7 million in 2006-07 to 16 million in 2014-15, according to telecom ministry data. On an average, BSNL was spending Rs 702 per line per month on rural landline services against a revenue of about Rs 78 per line per month, according to the 2008-09 audited accounts of BSNL. Of 593,601 inhabited villages in the country, according to Census 2001, BSNL had installed public telephones in 586, 000 of them by December 2014. Since returns are low, private telecom operators ignore village landline networks, providing no more than 2% of connections in 2010.
The audited reports of FY2015-16 report a loss of Rs. 3879. BSNL plans to invest more than Rs. 6,000 crores on network expansion and improvement. Under smart city initiative, BSNL also plans to install more than 1,00,000 public wi-fi amounting to Rs. 1,800 crores.
Though BSNL has seen improvement in its performance, Mahanagar Telecom Nigam Limited's net loss for the year ended March 2017, widened to Rs 2,963.05 crore from Rs 1,945.86 crore at the end of previous fiscal. The annual income of MTNL also declined by 3.6 percent to Rs 3,654.69 crore for 2016-17 from Rs 3,793.89 crore at the end of 2015-16. Telecom Minister Manoj Sinha said based on the financial results of MTNL for the FY 2016-17, the telecom operator has been classified as Incipient Sick CPSE as per Department of Public Enterprise (DPE) Guidelines.
As per the DPE guidelines, Department of Telecommunications has to formulate revival/ restructuring/ closure roadmap for MTNL, the process of which has been initiated. At present, there is no proposal for merger of BSNL and MTNL.
Hindustan Cables Ltd
Hindustan Cables Limited (HCL), a Government of India Undertaking, under the Ministry of Heavy Industries and Public Enterprises is a pioneer in the field of telecom cables in India. The Company was set up at Rupnarainpur, West Bengal in 1952 to make the country self-reliant in the manufacture and supply of various types of telecom cables. The Company’s main products are Jelly filled and Fibre optic cables. It has one of the largest capacities of 120 lacs conductor kilometres (LCKM) of Jelly filled cables. Manufacturing capacity for fibre optic cables is 40,000 fibre kilometres (FKM) per annum.
A fibre optic manufacturer is making losses at the time when more than 50,000 villages are connected to the optic network every year. Defence ministry declined to buy such heavy loss enterprise. In September 2016, the Cabinet has given its final nod for the strategic closure of Hindustan Cables that has stopped output since 2003. It has also approved an outlay of more than Rs.48 billion to pay statutory dues to these firms’ employees and creditors. The company has incurred a heavy loss of nearly Rs. 31.39 billion.
Hindustan Photo Films Manufacturing Co. Ltd
Hindustan Photo Films Manufacturing Company Limited (HPF) is an Indian-based public sector manufacturer of photographic films, cine films, X-ray films, graphic arts films, photographic paper, and chemistry. It is based at Udhagamandalam, a hill station in Tamil Nadu. Their photographic films are sold under the name "Indu", which means silver in Sanskrit (silver halides are used in the film).
Hindustan Photo Films Ltd, which employed over 714 employees as of 31 March 2012, was declared sick by the Board for Industrial and Financial Reconstruction in 1996. In the month of March 2013, a Rs 181 crore VRS package for employees of the ailing PSU Hindustan Photo Films based on notional pay scales of 2007. The audited financial report of HPFM for FY2014-15 incurs a loss of Rs. 2527 crores.
HMT Ltd and subsidiaries
With a cash assistance of Rs. 427.48 crore, the three loss-making subsidiaries of HMT, namely HMT Watches, HMT Chinar Watches and HMT Bearings will attain closure after separation of about a thousand employees through attractive VRS/VSS and settlement of their dues.
HMT Limited, formerly Hindustan Machine Tools Limited, was a state-owned manufacturing company under the Ministry of Heavy Industries and Public Enterprises in India. The company mainly manufactures industrial machines and tools with a workforce of around 2,500 under its six manufacturing units situated at Bangalore, Kochi, Hyderabad, Pinjore and Ajmer. HMT Ltd and its subsidiaries reported a loss of approx. Rs. 450 in FY2015-16.
- Chaitanya Kulkarni.
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