Loss-making CPSEs may be merged with profitable ones for investment funds
GN Bureau | May 30, 2016
A road map for the financial restructuring of central public sector enterprises (CPSEs) through various mechanisms, including mergers, would be drawn up soon. Also, the government is looking for options where weak CPSEs can be absorbed by profitable ones to leverage assets and generate resources for fresh investments, The Economic Times reported.
A report submitted by NITI Aayog on loss-making CPSEs had suggested consolidation in some cases.
The news report said that eventually the merger will not be restricted to only loss-making entities.
In its recommendations, the Aayog had also suggested that in some cases revival of a sick public sector undertaking should not be on a standalone basis.
According to the government data, there are about 80 enterprises that made a combined loss of Rs 27,300 crore at end of FY15. The cabinet last week approved the takeover of Hindustan Steel Works Construction Ltd (HSCL) by National Buildings Construction Corp. (NBCC). This is the first takeover by a CPSE of another which is not functioning under the same administrative ministry.
Finance minister Arun Jaitley in his budget speech 2016 had said that the government will encourage CPSEs to sell assets such as land and manufacturing units, to unlock value and make investments in new projects, and NITI Aayog will identify the CPSEs for strategic sale.
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