Govt declares 65 public sector units as sick and intends to close them
GN Staff | March 11, 2015
Once they were jewels in the crown of the government. But they are now sick and beyond revival. The government has decided to close down its best known enterprises like Air India, MTNL and Hindustan Shipyard. They are part of the list of 65 sick public sector undertakings (PSUs). The parliament has been informed about this development.
The five state-run organisations to be closed down include three HMT units whose brand of watches and tractors once ruled the Indian market.
The employees were being offered VRS (voluntary retirement scheme) package.
They were declared sick as per the criteria for a PSU to be declared as such, after they incurred losses worth 50 percent or more of their average net worth during four preceding years. The reasons for their sickness vary from enterprise to enterprise and included obsolete plants and machinery, heavy interest burden, resource crunch, surplus manpower and shortage of working capital.
There were 65 units in the list of sick PSUs as of March 31 last year.
Once a leader in aviation sector, Air India has accumulated losses of Rs 5,388 crore, Rs 5490 crore and Rs 7559 crore in years 2013-14, 2012-13 and 2011-12. The government has budgeted Rs 3,205 crore for infusion into Air India in FY16 compared with Rs 6,380 crore in the current fiscal.
Telecom major MTNL showed profit of Rs 7,820 crore in 2013-14. However, it had incurred losses of Rs 5,321 crore and Rs 4109 crore in the previous years.
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