Govt issues norms for revival of sick public sector units

Government today issued the guidelines for revival and restructuring of ailing and weak Central Public Sector Enterprises (CPSEs).
"The concerned administrative ministry/ department will be responsible for formulating revival/ restructuring/ closure roadmap for sick CPSEs as per the principles outlined.
"This would be done within three months from the issue of these guidelines in case of existing sick CPSEs, and within nine months from the end of the financial year for a CPSE becoming sick subsequently," said the guidelines issued by the Department of Public Enterprises (DPE).
The decision whether a company has become a sick company would be taken by the National Company Law Tribunal.

"The administrative ministry of the concerned CPSE shall initiate the process for preparation of restructuring/revival plan, which may include disinvestment or privatisation or closure options for sick/incipient sick CPSEs based on the classification as given above within 6 months from the closure of the financial year or within one month from finalisation of Annual Accounts, whichever is earlier," the norms said.
According to the guidelines, for high priority CPSEs, a comprehensive financial restructuring plan should be drawn comprising various methods of financing with minimum and unavoidable viability gap funding in the strategic national/defence interest.

Moreover, limited private investment through disinvestment within permissible limits may also be considered under the financial plan.

However, in case of other (non priority) CPSEs, financing plan should be based on economic viability of operations. Various options of leveraging private and/or institutional funding may be explored, the guidelines stated.
Besides, the options for adopting requisite technology and its up-gradation through various management options including JV, disinvestment or privatisation to be factored into the operational restructuring plan.
The operational restructuring also entails options of merger or de-merger of various operations in line with the proposed business plan to ensure continuous procurement of new technology and its up-gradation.
The concerned administrative ministry/department should clearly bring out the national and strategic interest served by the CPSEs in the light of the sectoral business environment, domestic as well as global, the norms said.

Prevailing market needs to be analysed for supply of goods or services through other providers in the private sector, domestic or from other countries, to bring out if there is a specific role of the CPSE in this segment to serve the national strategic or defence interests.
Keeping the business environment and other relevant facts in mind, a CPSE may be categorised as a high priority or priority CPSE to meet the strategic interest of the country. For this purpose, a report of the 14th Finance Commission may also be referred to.
All other sick CPSEs which are not required to serve the strategic national/defence interests should be categorised as non priority CPSEs, the guidelines added.