Congress may opt for strategic sale of sick PSUs

NEW DELHI: The UPA government could consider strategic sale of sick public sector units as part of its disinvestment strategy. As for the profitable companies, the navratnas and mini ratnas, the government will stick to the option of increasing public shareholding.

A senior member of the Manmohan Singh administration acknowledged that the strategic sale option appears to be a way out for divesting sick PSUs. Clarifying that strategic sale in some instances is not opposed by the Congress, a senior party leader said, ���the government hasn���t considered it till now because of the Left and later the economic slowdown. We don���t agree with wholesale disinvestment or taking the strategic sale route for every company.���

The disinvestment policy outlined in the Budget-2009 and the Congress election manifesto both focus on the government retaining at least 51% of equity in the public sector units, while the remaining is held by the public. But this would only work with profitable companies.

There are 242 centrally-owned public sector units, of these 160 are profitable. Among the 160 profit-making companies, there are 13 subsidiaries. Of the remaining, 99 of these profit-making companies have a positive net-worth, half of these companies require capital for expansion. The remainder of 48 companies comprise profit-making companies with negative net worth.

For the time being, with the economic slowdown showing no real signs of bottoming out, the government is rather conservative in outlining its policy on disinvestment. Both the public route and strategic sale would appear to be difficult propositions at the moment.

Even within the party there is a strong belief that the government needs to vary its disinvestment policy. The party has eschewed the strategic sale and wholesale privatisation route, questions on the fate of the sick public sector units still linger. The Congress accepts that while the divesting 49% stake to the public may be possible in the case of profit making and navratna units, it may be difficult to push such a plan through for sick units.

There appears to be a thinking in the party that in some instances the strategic sale route might be an effective option. A case in point being the success of strategic sale route in the case of two units in West Bengal���Jessop and Dunlop���both companies have been now turned around.