PSU performance takes centre stage
A row over the financial performance of state PSUs in Kerala is brewing as the ruling United Democratic Front (UDF) alleges that the better performance was just window dressing. The Left Democratic Front (LDF) says that during their tenure (2006-11), there has been a turnaround in the financial performance of PSUs and this was one of the focal points of their campaign in the election. According to the provisional figures of Public Sector Restructuring and Internal Audit Board (RIAB), 30 out of 36 units had together clocked a total profit of Rs 294.45 crore with a turnover of Rs 2,496 crore in 2010-11.
In 2005-06, all the 36 PSUs under the department of commerce and industries had clocked a total loss of Rs 69.64 crore with a turnover of Rs 1,540.40 crore. The number of profit-making units was 12 in that year. When the LDF came into power in 2006, 17 units remained closed.
But the UDF, especially the Industries minister PK Kunjalikkutty, strongly refutes this contention, saying the accumulated loss of the PSUs is still huge, and that they had only got working profit in these years. Without wiping out the accumulated loss, the LDF campaigned that most of the PSUs had come out of the red. The total accumulated loss will work out to hundreds of crores.
Speaking in the Assembly, he said the reports on net profit were cooked up while the PSUs were in troubled situation. For cleaning up the balance sheet, the government assistances and loans had been treated as equity of the companies. Proceeds from the sale of land and other assets were considered as income from the working of the company.
Refuting these arguments, Elamaram Karim, who was the Industries minister during the period, said the LDF did not say that the accumulated loss had been wiped out, but only spoke about the working results. Treating unrecovered loans as equity is a common practice and there was nothing wrong in it. The government had intended to clean-up the balance sheet in order to avail OD and loans from the financial institutions.
During the UDF rule in 2001-06, the government appointed an Enterprises Reforms Committee (ERC) to study the status and suggest ways of revamping of the PSUs. The ERC report emphatically stated that the PSUs had become a huge liability to the state exchequer and such undertakings should be immediately closed down or privatised. On the basis of the report, the government issued orders for closure / disinvestment of 25 companies and accordingly a large number of workers were given voluntary retirement.
Though the government had shelved the closure / disinvestment move thanks to widespread agitiations by workers, there was no inititative to make them vibrant and viable. From there, the LDF government tried hard to make them profitable and succeeded to a large extent, he said.
In 2006-07, the first year of governance of LDF, the companies recorded a total profit of Rs 91.18 crore with a turnover of Rs 1,763.74 crore. Kunjalikkutty said that the condition and the case of each PSU will be considered seperately and a decision would be taken. He also hinted changes in top posts of the PSUs.
The Left government initiated a plan to set up 10 new public sector units with an investment outlay of Rs 170 crore. Kunjalikkutty said that the government would go ahead with the formation of these new companies.