5 INVESTMENT IN PUBLIC ENTERPRISES Section I Analysis, Sources, Growth and Pattern

5.1 Public Sector today covers a wide pending allotment and long term loans. spectrum of industrial activities starting from Investment herein includes the paid up value core and strategic industries to consumer of shares issued as bonus shares by goods, trading and marketing activities, capitalizing free reserves and excludes transportation activities, contract and amount of paid up capital and long term loan consultancy services, tourist services, written off due to restructuring or otherwise. financial services, development of small The investment in central public sector industries, etc. enterprises from 2000-01, without making any adjustment on account of share capital Analysis of Investment invested by holding companies in their subsidiaries and/or long-term loans given by 5.1.1 Investment is the aggregate of paid- holding companies to their subsidiaries or up share capital, share application money vice-versa, is given below:

Table 5.1 (Rs. in crore) Year ending No. of Paid up Share Long term Investment enterprises capital application loans (3+4+5) money 1 2 3 4 5 6 As on 31.3.2001 250 86215 3225 184758 274198 As on 31.3.2002 240 101247 2933 218635 322815 As on 31.3.2003 240 109306 2933 223408 335647 As on 31.3.2004 242 111874 7087 231033 349994 As on 31.3.2005 237 117787 6494 233568 357849

Sources of Investment public sector enterprises, financial 5.1.2 The Central Government has institutions, banks and private parties (both contributed a major share of investment in Indian and foreign) have also contributed to public enterprises. In addition to Central the investment of these enterprise.The Government, some State Governments, details of investment by different parties for holding companies which are themselves the last five years are given below—

Investment in Public Enterprises 51 Table 5.2 SOURCES OF INVESTMENT (Rs. in crore)

Particulars Central State Holding Foreign FI/Banks Total Share Total Govt. Govt. Company Parties & Others Application Investment money pending allotment (1) (2) (3) (4) (5) (6) (7) (8) (9) (2 to 6) (7+8)

As on 31.3.2001 Equity 71771 1368 9866 756 2454 86215 Loan 49068 21 13183 4657 117829 184758 Total 120839 1389 23049 5413 120283 270973 3225 274198

As on 31.3.2002 Equity 86444 1468 10329 575 2431 101247 Loan 56710 26 16018 33261 112620 218635 Total 143154 1494 26347 33836 115051 319882 4732 324614

As on 31.3.2003 Equity 91368 2542 11453 545 3398 109306 Loan 56699 10 21808 29835 115056 223408 Total 148067 2552 33261 30380 118454 332714 2933 335647

As on 31.3.2004 Equity 93415 3200 11154 767 3338 111874 Loan 50864 262 23675 27394 128838 231033 Total 144279 3462 34829 28161 132176 342907 7087 349994

As on 31.3.2005 Equity 98313 3113 11391 1421 3549 117787 Loan 36453 266 28722 28550 139577 233568 Total 134766 3379 40113 29971 143126 351355 6494 357849

Growth of Investment 31.3.2005. The growth of investment in public 5.1.3 The investment in public sector sector enterprises, including enterprises enterprises has grown from Rs. 29 crore as under construction, over the years is given on 1.4.1951 to Rs. 357849 crore as on below—

52 Public Enterprises Survey 2004-05 : Vol.-I Table 5.3 Growth in Investment

Particulars Total Enterprises Investment (Numbers) (Rs. crore)

At the commencement of the 1st Five Year Plan (1.4.1951) 29 5

At the commencement of the 2nd Five Year Plan (1.4.1956) 81 21

At the commencement of the 3rd Five Year Plan (1.4.1961) 948 47

At the end of 3rd Five Year Plan (31.3.1966) 2410 73

At the commencement of the 4th Five Year Plan (1.4.1969) 3897 84

At the commencement of the 5th Five Year Plan (1.4.1974) 6237 122

At the end of 5th Five Year Plan (31.3.1979) 15534 169

At the commencement of the 6th Five Year Plan (1.4.1980) 18150 179

At the commencement of the 7th Five Year Plan (1.4.1985) 42673 215

At the end of 7th Five Year Plan (31.3.1990) 99329 244

At the commencement of the 8th Five Year Plan (1.4.1992) 135445 246

At the end of 8th Five Year Plan (31.3.1997) 213610 242

At the end of 9th Five Year Plan (31.3.2002) 324614 240

As on 31.3.2003 335647 240

As on 31.3.2004 349994 242

As on 31.3.2005 357849 237

Pattern of Investment cognate groups, changes in investment 5.1.4 The statement showing the total during the year and percentange share of investment for the last two years in various investment in each cognate group to the

Investment in Public Enterprises 53 total investment is given below— Table 5.4 Cognate Group-wise Pattern of Investments (Rs. in crore)

S. Cognate Group Investment as on Investment % Share No. 31.3.2005 31.3.2004 During as on 2004-05 31.3.2005 1 2 3 4 5(3-4) 6 I Enterprises Under Construction 6618.19 6155.11 463.08 1.85 II Enterprises Producing /Selling goods 1 Steel 18061.71 19939.96 -1878.25 5.05 2 Minerals & Metals 3800.66 4361.56 -560.90 1.06 3 Coal and Lignite 22931.73 23559.12 -627.39 6.41 4 Power 75300.45 68012.10 7288.35 21.04 5 Petroleum 34859.77 35259.77 -400.00 9.74 6 Fertilisers 13710.13 22309.62 -8599.49 3.83 7 Chemicals & Petrochemicals 2597.90 3439.03 -841.13 0.73 8 Heavy Engineering 5783.73 5107.88 675.85 1.62 9 Medium & Light Engineering 6928.45 6096.42 832.03 1.94 10 Transportation Equipment 3221.27 3161.42 59.85 0.90 11 Consumer Goods 4128.90 5542.53 -1413.63 1.15 12 Agro Based Industries 70.66 63.59 7.07 0.02 13 Textiles 19663.08 17456.42 2206.66 5.49 TOTAL (1 to 13) 211058.44 214309.42 -3250.98 58.98 III Enterprises Rendering Services 1 Trading and Marketing 6833.37 2763.55 4069.82 1.91 2 Transportation Services 4677.77 4659.76 18.01 1.31 3 Contract & Construction Services 8452.92 8554.40 -101.48 2.36 4 Ind Dev & Tech Consul. Services 16719.91 16047.79 672.12 4.67 5 Tourist Services 187.65 187.58 0.07 0.05 6 Financial Services 80099.83 74165.43 5934.40 22.38 7 Telecommunications and Information Technology 21608.20 21624.97 -16.77 6.04 8 Section 25 Companies 1593.00 1526.22 66.78 0.45 Total (1 to 8) 140172.65 129529.70 10642.95 39.17 Grand Total (I+II+III) 357849.28 349994.23 7855.05 100.00

54 Public Enterprises Survey 2004-05 : Vol.-I 5.1.4.1 The above table shows that of loan from internal resources by NFL. investment in some cognate groups have Decrease in Investment in Consumer Goods increased while in other cognate groups, it cognate group is due to change of nature of has come down. It is generally due to loan from long term to short term. Increase increase in share capital, increase/decrease in investment in Trading & Marketing Group in long-term loans, or capital restructuring by and Financial Group is due to increase in way of capitalization of reserves, waiver/write loans (Food Corpn of India, REC, PFC ) and off of equity or loan, or period of loan coming increase in equity (HUDCO). Detail of down less than one year. Generally, aggregate investment in individual CPSEs for investment in steel cognate group has come last two years arranged according to Group down as the CPSEs under this group have is given in Statement No.16 of this volume. repaid their loans from their internal Top 10 Enterprises in terms of invest- resources, while power cognate group have ments: shown increase in investment as equity 5.1.5 The total investment in the top 10 (NTPC, NHPC, NEEPC) as well as long term enterprises accounts for Rs. 185317.99 crore loans (NHEDC, NTPC, NPCIL, SJVNL) have i.e. 51.79 % of total investment of increased. Decrease in investment in Rs.357849.28 crore in 237 Central Public Fertilizer cognate group is due to Enterprises as on 31st March, 2005 as under: restructuring of loan ( FCI) and repayment

Table 5.5 (Rs. in crore) S. No. Name of the Enterprise Investment 1 National Thermal Power Corporation Ltd. 25670.68 2 Housing & Urban Dev. Corpn. Ltd. 21714.16 3 Bharat Sanchar Nigam Ltd. 20720.89 4 Power Finance Corporation 20680.47 5 Rural Electrification Corpn. Ltd. 18476.98 6 Nuclear Power Corpn. of India Ltd. 16993.33 7 National Hydroelectric Power Corpn.Ltd. 16670.31 8 Indian Railway Finance Corporation Ltd. 16388.06 9 Power Grid Corporation of India Ltd 16042.10 10 ONGC Videsh Ltd. 11961.01 Total 185317.99

Working Capital Central Government is also providing funds 5.1.6 Working capital requirements of to meet the working capital needs of the public sector are generally met through cash public sector enterprises. Details of working credit and advances from banks. However, capital/short term loans are as under: Table 5.6 (Rs. in crore) Sources 2004-05 2003-04 2002-03 2001-02 2000-01 Banks/ Financial Institutions 68493 56396 60884 64468 47575 Central Government 19018 6378 2535 4240 4656 Others 2715 2909 3903 5104 12297 Total 90226 65683 67322 73812 64528

Investment in Public Enterprises 55 Section-II DELEGATION OF ENHANCED FINANCIAL POWERS TO CPSEs

5.2 Under the Articles of Association, the 5.2.2.1 The powers presently delegated to Board of Directors of PSEs enjoy certain the Boards of Navratna PSEs are as under: - amount of financial powers and autonomy in (a) To incur capital expenditure on purchase respect of recruitment, promotion and other of new items or for replacement, without service conditions of below Board level any monetary ceiling. employees. The Board of Directors of a PSE exercises the delegated powers subject to (b) To enter into technology joint ventures or broad policy guidelines issued by strategic alliances. Government from time to time. The (c) To obtain by purchase or other Government have granted enhanced powers arrangements, technology and know- to the Boards of profit making enterprises how. under various schemes like Navratna and (d) To effect organisational restructuring Miniratna. including establishment of profit centres, 5.2.1 Keeping in view the pledge made in opening of offices in India and abroad, the National Common Minimum Programme creating new activity centres, etc. (NCMP) that full managerial and commercial (e) Creation and winding up of all posts autonomy will be devolved to successful profit including and upto those of non-Board making companies operating in a competitive level Directors, i.e., Functional Directors environment, the Government have reviewed who may have the same pay-scales as the powers delegated to the Board of that of Board level Directors, but who Directors of Navratna, Miniratna and other would not be members of the Board. All profit making PSEs and have decided in appointments upto this level would also August, 2005 to enhance the powers. be in the powers of the Boards and Navratna scheme would include the power to effect internal 5.2.2 Under this scheme, the Government transfers and re-designation of posts. has delegated higher powers to PSEs having (f) The Board of Directors of these PSEs comparative advantage and the potential to have the power to further delegate the become global players. The Navratna PSEs powers relating to Human Resource are: Management (appointments, transfer, posting, etc.) of below Board level (i) Bharat Heavy Electricals Ltd. executives to sub-committees of the (ii) Corporation Ltd. Board or to executives of the PSE, as (iii) GAIL (India) Ltd. may be decided by the Board of the PSE. (iv) Corporation Ltd. (g) To raise debt from the domestic capital markets and for borrowings from (v) Ltd. international market, which would be (vi) Mahanagar Telephone Nigam Ltd. subject to the approval of RBI/ Department of Economic Affairs as may (vii) National Thermal Power Corporation be required and should be obtained Ltd. through the administrative Ministry. (viii) Oil & Natural Gas Corporation Ltd. (h) To establish financial joint ventures and (ix) Ltd. wholly owned subsidiaries in India or

56 Public Enterprises Survey 2004-05 : Vol.-I abroad with the stipulation that the equity c) The decisions on such proposals should investment of the PSE should be limited preferably be unanimous. to the following: - d) In the event of any decision on important i. Rs. 1000 crore in any one project, matters not being unanimous, a majority decision may be taken, but at least two ii. 15% of the networth of the PSE in one project, thirds of the Directors should be present, including those mentioned above, when iii. 30% of the networth of the PSE such a decision is taken. The objections, in all joint ventures/ subsidiaries dissents, the reasons for over-ruling put together. them and those for taking the decision (i) Mergers and acquisitions, subject to the should be recorded in writing and conditions that (i) it should be as per the minuted. growth plan and in the core area of e) No financial support or contingent liability functioning of the PSE, (ii) conditions/ on the part of the Government should limits would be as in the case of be involved. establishing joint ventures/subsidiaries, f) These PSEs will establish transparent and (iii) the Cabinet Committee on and effective systems of internal Economic Affairs would be kept monitoring, including the establishment informed in case of investments abroad. of an Audit Committee of the Board with (j) To approve business tours abroad of membership of non-official Directors. functional directors up to 5 days’ g) All the proposals, where they pertain to duration (other than study tours, capital expenditure, investment or other seminars, etc.) in emergency, by the matters involving substantial financial or Chief Executive of the PSE under managerial commitments or where they intimation to the Secretary of the would have a long term impact on the administrative Ministry. In all other cases structure and functioning of the PSE, including those of Chief Executive, tours should be prepared by or with the abroad would continue to require the assistance of professionals and experts prior approval of the Minister of the and should be appraised, in suitable Administrative Ministry/ Department cases, by financial institutions or reputed 5.2.2.2 The above mentioned delegation is professional organizations with subject to the following conditions and expertise in the areas. The financial guidelines:- appraisal should also preferably be a) The proposals must be presented to the backed by an involvement of the Board of Directors in writing and appraising institutions through loans or equity participation. reasonably well in advance, with an analysis of relevant factors and h) The exercise of authority to enter into quantification of the anticipated results technology joint ventures and strategic and benefits. Risk factors, if any, must alliances shall be in accordance with the be clearly brought out. Government guidelines as may be issued from time to time. b) The Government Directors, the Financial Directors and the concerned Functional i) The Boards of these PSEs should be Director(s) must be present when major restructured by inducting at least four decisions are taken, especially when non-official Directors as the first step they pertain to investments, expenditure before the exercise of the enhanced or organizational/ capital restructuring. delegation of authority. j) These public sector enterprises shall not

Investment in Public Enterprises 57 depend upon budgetary support or 5.2. 3.1 Presently there are 44 Miniratna Government guarantees. The resources PSEs. Their names are as under: for implementing their programmes Category-I should come from their internal resources or through other sources, 1. Bharat Dynamics Ltd. including the capital markets. 2. Ltd. Miniratna scheme 3. Bongaigaon Refinery & Petrochemicals 5.2.3 In October 1997, the Government Ltd. had also decided to grant enhanced 4. Central Warehousing Corporation autonomy and delegation of financial powers 5. Chennai Petroleum Corporation Ltd. to some other profit making companies subject to certain eligibility conditions and 6. Container Corporation of India Ltd. guidelines to make them efficient and 7. Dredging Corporation of India Ltd. competitive. These companies, called Miniratnas, are in two categories, namely, 8. Ltd. Category- I and Category-II. The eligibility 9. Hindustan Aeronautics Ltd. conditions and criteria are: 10. Ltd. (i) Category-I PSEs should have made 11. Housing & Urban Development profit in the last three years continuously, Corporation Ltd. the pre-tax profit should have been Rs.30 crores or more in at least one of 12. India Tourism Development Corporation the three years and should have a Ltd. positive net worth. 13. IRCON (International) Ltd. (ii) Category-II PSEs should have made 14. Kochi Refineries Ltd. profit for the last three years continuously and should have a positive 15. Kudremukh Iron Ore Company Ltd. net worth. 16. M M T C Ltd. (iii) These PSEs shall be eligible for the 17. National Aluminium Company Ltd. enhanced delegated powers provided 18. Ltd. they have not defaulted in the repayment of loans/interest payment on 19. National Mineral Development any loans due to the Government. Corporation Ltd. (iv) These public sector enterprises shall not 20. Neyveli Lignite Corporation Ltd. depend upon budgetary support or 21. Ltd. Government guarantees. 22. Ltd. (v) The Boards of these PSEs should be restructured by inducting at least three 23. Power Finance Corporation Ltd. non-official Directors as the first step 24. Power Grid Corporation Ltd. before the exercise of enhanced 25. Rashtriya Chemicals & Fertilizers Ltd. delegation of authority. (vi) The administrative Ministry concerned 26. Rural Electrification Corporation Ltd. shall decide whether a Public Sector 27. Shipping Corporation of India Ltd. Enterprise fulfilled the requirements of 28. State Trading Corporation of India Ltd. a Category-I/Category-II company before the exercise of enhanced 29. Telecommunications Consultants (India) powers. Ltd.

58 Public Enterprises Survey 2004-05 : Vol.-I Category-II investment of the PSE in any one 1. & Co. Ltd. project should be limited to 15% of the networth of the PSE or Rs. 500 2. Educational Consultants (India) Ltd. crore, whichever is less. The overall 3. Ferro Scrap Nigam Ltd. ceiling on such investment in all 4. HMT (International) Ltd. projects put together is 30% of the 5. Hospital Services Consultancy networth of the PSE. Corporation (I) Ltd. (b) Category II PSEs: To establish joint 6. India Trade Promotion Organisation. ventures and subsidiaries in India with the stipulation that the equity 7. Indian Medicines Pharmaceuticals investment of the PSE in any one Corporation Ltd. project should be 15% of the 8. M S T C Ltd. networth of the PSE or Rs. 250 9. Manganese Ore India Ltd. crore, whichever is less. The overall 10. M E C O N Ltd. ceiling on such investment in all projects put together is 30% of the 11. National Film Development Corporation networth of the PSE. Ltd. (iii) Mergers and acquisitions 12. P E C Ltd. The Board of Directors of these PSEs 13. Rajasthan Electronics & Instruments Ltd. have the powers for mergers and 14. R I T E S Ltd. acquisitions, subject to the conditions 15. Water & Power Consultancy Services that (i) it should be as per the growth (India) Ltd. plan and in the core area of functioning of the PSE, (ii) conditions/limits would 5.2.3.2 The delegation of decision-making be as in the case of establishing joint authority available at present to the Boards ventures/subsidiaries, and (iii) the of these PSEs is as follows: Cabinet Committee on Economic Affairs (i) Capital Expenditure would be kept informed in case of (a) For PSEs in category I: The power investments abroad. to incur capital expenditure on new (iv) Scheme for HRD projects, modernization, purchase To structure and implement schemes of equipment, etc., without relating to personnel and human Government approval upto Rs. 500 resource management, training, crore or equal to net worth, voluntary or compulsory retirement whichever is less. schemes, etc. The Board of Directors of (b) For PSEs in category II: The power these PSEs have the power to further to incur capital expenditure on new delegate the powers relating to Human projects, modernization, purchase Resource Management (appointments, of equipment, etc., without transfer, posting, etc.) of below Board Government approval upto Rs. 250 level executives to sub-committees of crore or equal to 50% of the Net the Board or to executives of the PSE, worth, whichever is less. as may be decided by the Board of the PSE. (ii) Joint ventures and subsidiaries: (v) Tour abroad of functional Directors (a) Category I PSEs: To establish joint ventures and subsidiaries in India The Chief Executive of the PSE have with the stipulation that the equity the power to approve business tours

Investment in Public Enterprises 59 abroad of functional directors up to 5 (i) The power to incur capital expenditure days’ duration (other than study tours, without Government approval stands seminars, etc.) in emergency, under revised to Rs. 150 crore or equal to 50% intimation to the Secretary of the of the Net worth, whichever is less. administrative Ministry. In all other cases (ii) The Chief Executive of the PSE shall including those of Chief Executive, tours have the power to approve business abroad would continue to require the tours abroad of functional directors up prior approval of the Minister of the to 5 days’ duration (other than study Administrative Ministry/ Department. tours, seminars, etc.) in emergency, (vi) Technology Joint Ventures and under intimation to the Secretary of the Strategic Alliances administrative Ministry. In all other cases including those of Chief Executive, tours To enter into technology joint ventures, strategic alliances and to obtain abroad would continue to require the prior approval of the Minister of the technology and know-how by purchase or Administrative Ministry/ Department. other arrangements, subject to Government guidelines as may be issued from time to 5.2.4.1 The delegation is subject to the time. following conditions: 5.2.3.3 The above delegation of powers is (a) inclusion of the project in the subject to similar conditions as are applicable approved Five Year and Annual to Navratna PSEs. Plans and outlays provided for. Other profit making PSEs (b) The required funds can be found 5.2.4 Those PSEs which have shown a from the internal resources of the company and extra budgetary profit in each of the 3 preceding accounting resources (EIBR) and the years and have a positive net worth are categorized as ‘other profit making PSEs’ and expenditure is incurred on schemes included in the capital budget have been delegated enhanced powers as approved by the Government. under:-

60 Public Enterprises Survey 2004-05 : Vol.-I 6 DISINVESTMENT

6.1 The policy of the Government on · The Governement believes that Disinvestment has evolved over a period of privatisation should increase time.The National Common Minimum competition, not decrease it. It will not Programme (NCMP) outlines the present support the emergence of any policy of the Government with respect to the monopoly that only restricts Public Sector, including disinvestment of competition. It also believes that there Government's equity in Central Public Sector Enterprises (CPSEs). The salient features of must be a direct link between the policy as laid down in NCMP are as privatisation and social needs—like, for follows:- example, the use of privatisation · “The Government is committed to a revenues for designated social strong and effective public sector schemes. Public sector companies and whose social objectives are met by its nationalised banks will be encouraged commercial functioning. to enter the capital market to raise · The Government is pledged to devolve resources and offer new investment full managerial and commercial avenues to retail investors.” autonomy to successful, profit-making 6.2 The chronology of evolution of policy companies operating in a competitive environment. on disinvestment since 1991-1992 is given in Annexure-I. Disinvestment of · Generally profit making companies will not be privatised. Government equity in Public Sector began in 1991-92.Till 1999-2000, it was primarily · All privatisations will be considered on a transparent and consultative case- through sale of minority shares in small lots. by-case basis. From 1999-2000 till 2003-2004, the · The Government will retain existing emphasis of disinvestment changed in “navaratna” companines in the public favour of Strategic Sale. At present, the sector while these companies raise emphasis is to list, large, profitable CPSEs resources from the capital market. on domestic stock exchanges and to · While every effort will be made to selectively sell small portions of equity in modernize and restructure sick public listed, profitable CPSEs (other than the sector comapnies and revive sick navratnas). industry, chronically loss-making 6.3 The proceeds from disinvestment companies will either be sold-off, or closed, after all workers have got their from April, 1991 to November, 2005 legitimate dues and compensation. amounted to Rs.47,671.62 crore. Details of · The Government will induct private the annual realisation and the industry to turn around companies that methodologies adopted are given in have potential for revival. Annexure-II.

Disinvestment 61 6.4 The Ministry of Industry (Department term of this Commission was subsequently of Public Enterprises) vide a resolution dated extended till October,2004. The 23rd August,1996, constituted a Public reconstituted Commission submitted its Sector Disinvestment Commission for a Reports on 41 PSEs, including review cases period of three years. The term was further of earlier Commission’s recommendations extended till 30th November,1999. The on 4 PSEs. The term of the Commission Commission submitted its reports on 58 expired on 31st October, 2004 and it has PSEs. The Commission was reconstituted in been wound up. July, 2001 for a period of two years. The

62 Public Enterprises Survey 2004-05 : Vol.-I Annexure-1

Chronology of the evolution of the policy on disinvestment since 1991-92 Date Event 1991-92 Interim Budget Government announced its intention to divest upto 20% of Government equity in slected PSEs in favour of public sector institutional investos. Industrial Policy Statement In the case of selected enterprises, part of Government dated 24.7.1991 holdings in the equity share capital of the enterprises will be disinvested in order to provide further market discipline to the performance of public enterprises. Rangarajan Committee-April,1993 It emphasized the need for substantial disinvestment and stated that while the percentage of equity to be divested should be not more than 49% for industires explicity reserved for the public sector, it should be either 74% or 100% for others. Budget speech-1998-1999 “Government have also decided that in the generality of cases, the Government shareholding in public sector enterprises will be brought down to 26 per cent. In cases of public sector enterprises involving strategic considerations, Government will continue to retain majority holding. The interest of workers shall be protected in all cases.” Budget speech-1999-2000 “Government strategy towards public sector enterprises will continue to encompass a judicious mix of strengthening strategic units, privatising non-strategic ones through gradual disinvestment of strategic sale and devising viable rehabilitation strategies for weak units.” Cabinet decision dated 16.3.1999 Public Sector Enterprises (PSEs) have been classified into strategic and non-strategic areas for the purpose of disinvestment. Strategic PSEs would be those in the areas of: (a) Arms and ammunitions and the allied items of defence equipment, defence air-crafts and warships; (b) Atomic engery (except in the areas related to the operation of nuclear power and applications of radiation and radio-isotopes to agriculture medicine and non- strategic industries);

Disinvestment 63 (c) Railway transport All other PSEs were to be considered as non-strategic. For the non-strategic PSEs, it was decided that the reduction of Government stake to 26% would not be automatic. Decision in regard to the percentage of disinvestment i.e., Goverment’s stake going down to less than 51% or to 26% would be taken on the following considerations : a) Whether the industrial sector requires the presence of the public sector as a countervailing force to prevent concentration of power in private hands; and b) Whether the industrial sector requires a proper regulatory mechanism to protect the cosumer interest before Public Sector Enterprises are privatised. Budget speech 2000-2001 Government announced its decision to reduce its stake in the non-strategic PSEs even below 26%, if necessary. There would be increasing emphasis on strategic sale and the entire proceeds from disinvestment/privatisation would be deployed in social sector, restructuring of PSEs and retirement of public debts. Decision dated 23.6.2000 In order to secure the presence of the public sector as a Countervailing force, the Government took the decision of not going for disinvestment of GAIL, IOC and ONGC, and retaining them as flagship companies. Decision dated 7.9.2002 Central Public Sector Enterprises (PSEs), Central Government owned Cooperative Societies (where Government’s ownership is 51% or more) should not be permitted to participate in the disinvestment of other PSEs as bidder. If in some specific cases any deviation from these restrictions is considered desirable in public interest. the Ministry/Department may bring an appropriate proposal for consideration of the Core Group of Secretaries on Disinvestment. Budget Speech 2003-04 Details about the already announced Disinvestment Fund and Asset Management company, to hold residual shares post disinvestment, shall be finalised early in 2003-04.

64 Public Enterprises Survey 2004-05 : Vol.-I Budget Speech 2004-05 The Disinvestment and privatization are useful (July 2004) economic tools. Government will selectively employ these tools, consistent with the declared policy. Government will establish a Board for Reconstruction of Public Sector Enterprises (BRPSE). The Board will advise the Government on the measures to be taken to restructure PSEs, including cases where disinvestment or closure or sale is justified. The disinvestment revenues will be part of the Consolidated Fund of India. While presenting the Budget for 2005- 06, the manner in which the said revenues have been or will be applied for specified social sector schemes will be reported to the House.

Decision dated 27.01.2005 (i) Government decided, in principle, to list large, profitable Public Sector Enterprises (PSEs) on domestic stock exchanges and to selectively sell a minority stake in listed, profitable PSEs while retaining atleast 51% of the shares alongwith full management control so as not to disturb the Public Sector character of the companies.

(ii) Government has also decided to constitute a "National Investment Fund" into which the realisation from sale of minority shareholding of the Government in profitable PSEs would be channelised. The Fund would be maintained outside the Consolidated Fund of India. The income from the Fund would be used for the following broad investment objectives:-

(a) Investment in social sector projects which promote education, health care and employment; (b) Capital investment in selected profitable and revivable Public Sector Enterprises that yield adequate returns in order to enlarge their capital base to finance expansion/ diversification.

Disinvestment 65 Annexure-II Summary of disinvestment target and realisation since 1991-92 and the methodologies adopted

Year No. of Budgeted Receipts Receipts Receipts Total Main transactions transa- receipt through sale through sale through receipts ctions (Rs. crore) of residual/ of shares Strategic (Rs. minority shares to CPSEs sale crore) (Rs. crore) (Rs. crore) (Rs. crore) 1991-92 47 2500 3037.74 0.00 0.00 3037.74 Minority shares sold in Dec 1991 and Feb 1992 by auction method in bundles of “very good”, “good” and “average” companies 1992-93 29 2500 1912.42 0.00 0.00 1912.42 Shares sold separately for each company by auction method. 1993-94 - 3500 0.00 0.00 0.00 0.00 Equity of 6 companies sold by open auction but proceeds received in 94-95. 1994-95 17 4000 4843.10 0.00 0.00 4843.10 Shares sold by auction method. 1995-96 4 7000 168.48 0.00 0.00 168.48 Shares sold by auction method. 1996-97 1 5000 379.67 0.00 0.00 379.67 GDR -VSNL in international market. 1997-98 1 4800 910.00 0.00 0.00 910.00 GDR -MTNL in international market. 1998-99 5 5000 5371.11 0.00 0.00 5371.11 GDR-VSNL; Domestic offerings of CONCOR and GAIL; Cross purchase by 3 Oil sector companies i.e. GAIL, ONGC and IOC. 1999-00 5 10000 1479.27 0.00 380.87 1860.14 GDR-GAIL; Domestic offering of VSNL; capital restructuring of BALCO; Strategic sale of MFIL. 2000-01 5 10000 0.00 1317.23 554.03 1871.26 Strategic sale of BALCO and LJMC; Sale of KRL, CPCL and BRPL to CPSEs. 2001-02 8 12,000 0.00 0.00 5657.44 5657.44 Strategic sale of CMC, HTL, VSNL, IBP, PPL and sale of hotel properties of ITDC & HCI; Special dividend from STC and MMTC; sale of shares to VSNL employees. 2002-03 8 12,000 0.00 0.00 3347.98 3347.98 Strategic sale of HZL, IPCL, and sale of hotel properties of HCI & ITDC; Control premium from renunciation of rights issue from MUL; Put Option of MFIL; sale of shares to employees of HZL and CMC. 2003-04 2 14,500 15205.35 0.00 342.06 15547.41 Strategic sale of JCL; Call Option of HZL; IPO / Offer for Sale of MUL, IBP IPCL, CMC, DCI, GAIL and ONGC; Sale of shares of ICI Ltd. 2004-05 3 4,000 2700.06 0.00 64.81 2764.87 Offer for Sale of NTPC; sale of shares to IPCL employees etc. Total 96800 36007.20 1317.23 10347.19 47671.62

66 Public Enterprises Survey 2004-05 : Vol.-I 7 GENERATION OF INTERNAL RESOURCES BY PUBLIC ENTERPRISES

7.1 The generation of internal resources This has increased to Rs. 188782 crore in by any enterprise is very important. For the 9th Plan Period. During first three years public sector it has assumed greater of 10th Plan, Public Sector Enterprises imporatnce, because in addition to financing generated Rs. 213750 crore. its own plans of expantion or otherwise, they 7.3 Year wise generation of gross contributes towards development of internal resources by the public enterprises peripheral area, protection of environment, during the 8th Plan and 9th Plan Period and providing medical, educational facilities to first three years of 10th Plan are given in the surrounding population. It also table 7.2 below. contributes in generation of employment, 7.4 It may be seen from the above table promoting balanced regional development that the number of enterprises generating etc. Generation of Internal Resources by internal resources has decreased to 149 in public sector enterprises has been steadily the current year from 152 in the previous growing over a period of time as appears from year. The amount of internal resources the details given in Table 7.1. generated has increased from Rs. 75622 Table 7.1 crore in 2003-04 to Rs. 83855 crore in Generation of Gross Internal Resources 2004-05, a growth of 10.89%. during 3rd to 10th Plan Period 7.5 The details of cash losses incurred by enterprises during the last five years is Sl. Plan Amount No. (Rs. in crore) given in statement 21 of this volume. 1. III 287 7.6 A component of the gross internal 2. IV 1260 resources generated by each enterprise is 3. V 3439 utilised for repayment of loans, additional 4. VI 13768 working capital requirements, meeting Non- Plan capital expenditure requirements etc. 5. VII 37678 Therefore, the total internal resources 6. VIII 101212 generated are not always available for 7. IX 188782 financing the Plan schemes. The amount of 8. X (2002-03) 54273 the internal resources available for financing 9. 2003-04 75622 the Plan schemes of public enterprises, 10. 2004-05 83855 given in the Annual Budget documents, is at Table 7.3. The table also lists out amount 7.2 The above table indicates that the of extra budgetary resources raised by generation of internal resources by the public enterprises, budgetary support public sector enterprises have increased received from the Government and the total significantly in each Plan Period. In the 3rd Plan outlay during the 8th Five Year Plan, Plan, the gross generation of internal 9th Five Plan and first three years of 10th resources by PSEs was only Rs. 287 crore. Five Year Plan.

Generation of Internal Resources by Public Enterprises 67 Table 7.2 Internal Resources Generation Year No. of enterprises Details of Internal Resources Generating Gross Internal Resources Depreciation DRE Retained Total Written off Profits

VIII Plan

1992-93 146 7184.34 1198.71 6409.34 14792.39

1993.94 135 8013.27 287.18 8375.63 -16676.08

1994-95 140 9717.72 448.79 9825.54 19992.05

1995-96 143 11777.35 461.53 11958 24197.59

1996-97 144 12826.77 298.99 12427.93 25553.69

Total VIII Plan 49519.45 2695.20 48997.15 101211.80

IX Plan

1997-98 144 15279.67 288.61 15623.19 31191.47

1998-99 136 14440.76 285.38 16606.49 31302.63

1999-00 135 17520.62 246.69 18165.12 35932.43

2000-01 134 19363.85 343.79 18103.36 37811.00

2001-02 130 24360.90 255.24 27927.67 52543.81

Total IX Plan 90953.80 1419.71 96425.83 188780.34

X Plan

2002-03 129 26477.41 619.38 27176.50 54273.29

2003-04 152 30691.90 790.25 44139.56 75621.71

2004-05 149 32468.29 538.87 50847.43 83854.59

68 Public Enterprises Survey 2004-05 : Vol.-I Table 7.3 Resources Mobilisation and Plan Investment by Central Public Sector Enterprises. (Rs. in crore)

Year Net Internal Extra Budgetary Budgetary Plan Outlay Resources Resources Support

VIII Plan

1992-93 10081.30 11001.43 3443.66 24526.89

1993-94 9862.03 14743.93 4067.65 28673.61

1994-95 14932.00 13445.53 4379.59 32757.12

1995-96 16726.90 12674.02 3919.46 33320.38

1996-97 13157.81 16901.23 3644.37 33703.41

Total VIII Plan 64760.54 68766.14 19454.73 152981.41

IX Plan

1997-98 15111.81 14912.25 3840.56 33864.62

1998-99 19294.95 12280.46 4250.32 35825.78

1999-00 13245.95 17700.37 4528.66 35474.98

2000-01 25046.96 18007.71 4472.09 47526.76

2001-02 25744.98 24713.19 4909.70 55367.87

Total IX Plan 98444.65 87613.98 22001.33 208059.96

X Plan

2002-03 32858.83 21017.05 5313.91 59189.78

2003-04 31103.29 26855.66 5014.46 62973.41

2004-05 32222.46 26006.52 5090.24 63319.22

Generation of Internal Resources by Public Enterprises 69 8 PRICING POLICY IN PUBLIC ENERPRISES

A. PRICING POLICY various sectors for private partipation and 8.1 The investment policy of the globalisation of Indian economy, prices of Government aims at channelising public products and service in public sector also investment in basic and infrastructural sector are generally determined by market forces The CPSEs have to compete with other and for continuing with the provisions of companies in India as well as abroad. essential commodities. The pricing policies Indiviual CPSE, are generally fix price for in the Central Public Sector Enterprises their products & services on their own (CPSEs) are therefore, interlinked with the except for certain sectors details of which investment policies. Another dimension of are given in subsequent para's. the pricing policy is to create a balance between the social obectives of these 8.4 Govt. of India has evolved pricing enterprises and their commercial viability policies in respect of certain sectors. These and also the overall economic policies of the policies are applicable to public sector as Government. well as private sector and are discussed below: 8.2. It has been accepted principle that prices of products produced and services (i) AGRICULTURE rendered by public enterprises should be so 8.4.1 Agriculutural products comprise both determined that at a satisfactory level of food grains and industrial raw materials. The capacity utilization these enterprises not only stress is on adoption of a pricing policy cover their costs of production, but also which will provide a minimum fair return to generate a reasonable amount of surplus. the producers, reduce fluctuations in prices This will assist in capital formation and and achieve an equitable distribution of enable redeployment of the capital for essential consumer goods. An efficient further strengthening of economic and social public distribution system is an essential infrastructure. In this sense, product making ingredient to ensure that this pricing strategy in public enterprises is not quite inconsistent works equitably. Under this policy, Govt. of with the public purpose. It is the India fixes Minimum Support Prices (MSP) Government’s expectation that with the in respect of major food grains and industrial massive investment in the public sector raw materials on the recommendation of the enterprises, these enterprises do not at any Commission on Agricultural Costs Prices stage erode the resources base, but (CACP). At the same time, Government strengthen it. It is therefore, recognized that ensures supply of major food grains to weaker sections of society at reasonable subect to the total overall impact of certain rates through public distribuition system. product prices on the economy, the Food Corporation of India implement producers in the public sector should procurement and public distributution policy generally have proper control in determining for food grains while jute Corporation of the prices of their commodities. India and Cotton Corporation India 8.3. However with the dismantling of implement MSP policy for jute and cotton administered price mechanism, opening up respectively.

70 Public Enterprises Survey 2004-05 : Vol.-I ii) COAL However, the Government, through its policy 8.4.2 The pricing of coal has been innitiatives attempts to ensure adequate completely deregulated after Colliery Control availability of Steel in the domestic market Order, 1945. Under the Colliery Control and a stable price regime. Order, 2000, the Central Government has no (v) PETROLEUM PRODUCTS power to fix the prices of coal and the coal companies themselves are competent to fix 8.4.5 Effective from 1/4/02, pricing of grade-wise prices for coal produced by them petroleum products except for PDS based on marketing economics. Kerosene and domestic LPG, has become market determined. As per the decision (iii) FERTILIZERS taken at the time of announcement of APM 8.4.3 At present, only urea, which is the dismantling, post APM Government main nitrogenous fertilizer constituting about subsidies on PDS Kerosene and Domestic 60% of the total fertilizer consumption in the LPG were to be on flat rates basis to be country, is under statutory price and partial provided from the fiscal budget and after distribution control. Urea is sold/made providing for this subsidy, the retail prices available to the farmers at statutory notified were to vary as per changes in the sale price. All other varieties of fertilizers international prices. These subsidies were to were removed from price and distribution be phased out in three to five years effective control between August '92 and June '94. from 1/4/2002. The subsidies from fiscal However, Government of India still indicates budget were based on international prices the MRP in respect of major phosphatic and of Kerosene and LPG prevailing in Arab Gulf complex fertilizers, namely Di-Ammonium market during the month of March, 2002, i.e. Phosphate (DAP), Muriate of Potash (MOP) $23.65 per barrel and $194 per MT and Complex Fertilizers. The MRP for Single respectively. At present subsidy is being Supper Phosphates (SSP) are indicated by allowed at the rate of Rs. 22.58 per cylinder the respective State Government. The and Rs. 0.82 per litre in respect of LPG statutorily notified sale price and indicative (Domestic) and SKO(PDS) respectively. MRP is generally kept less than the cost of 8.4.5.1 The financial year 2004-05 witnessed production of the respective manufacturing sharp and spiraling increase in international unit. The difference between the cost of prices of Crude Oil and petroleum products. production and the selling price/MRP is paid There was a severe escalation in prices of as subsidy/concession to manufacturers. As Crude Oil and Petroleum products during the consumer prices of both indigenous and 2004-05 vis-a-vis March, 2002. imported fertilizers are fixed uniformly, financial support is also given on imported 8.4.5.2 The impact of such phenomenal price urea and decontrolled phosphatic and increase in the international market is bound potassic fertilizers. to have major impact on Oil Industry which is heavily dependent on imports for crude (iv) STEEL procurement. However, if Import Parity 8.4.4 Prices of steel products have been Pricing (IPP) mechanism had been allowed fully decontrolled and the Central Public full play that would have caused severe Sector Enterprises (CPSEs) are free to hardship to the end consumers. To insulate 8determine prices of their products/services the end consumers it was decided that the based on free interplay to market forces. share of burden has been divided between

Socio-Economic and Welfare Measures 71 various stakeholders i.e. Government, Oil petrol was fixed in line with the import parity companies and consumers. Hence, series of price. The retail price of petrol was further duty structuring and some price revisions revised downwards in line with international were carried out to distribute the burden of prices effective 16-11-04. However, the price hike in an equitable manner. increase in the diesel retail price was pegged at 50% of the level of increase required on 8.4.5.3 Moderate imcreases to the extent of the basis of import parity and no further Rs.2 per litre on petrol, Re.1 per litre on diesel increase wsa made in the diesel price on 16- and Rs.20 per LPG Cyllinder were effected 11-2004. on 16-6-2004, coupled with excise duty reductions of 4% on Petrol, 3% on diesel and 8.4.5.7 The retai s elling price of LPG (Packed and 8% on LPG (Domestic). Domestic) was revised again by the oil th 8.4.5.4 In order to mitigate the hardships of marketing companies effective 5 November, oil companies, Government had worked out 2004 by Rs.20 per cylinder in view of the a new methodology with effect from 1st abnormally high prices of crude oil and August, 2004 allowing OMCs limited freedom petroleum products in the international market. to revise the prices of MS/HSD within a price However, there was no hike in retail selling band. The concept of price band is based price of PDS Kerosene which has remained on the principles of rolling average prices of unchanged (except minor correction in these products in the international markets. dealers’ commission / VAT by State Accordingly, oil companies are permitted dto Government since March, 2002. carry out autonomous adjustments in prices 8.4.5.8 In the Finance Bill,2005 the within a band of +/- 10% of the mean of rolling Government has reduced customs duty on average C&F prices of last 12 months and crude oil from 10% to 5%. The changes in last quarter, i.e. three months. Customs and Excise duties in respect of 8.4.5.5 In case of breach of this band, the major petroleum products is given below: OMCs have to approach the Ministry of Finance through MOP&NG to modulate the Existing as on Proposed excise duty rates so that the spiraling prices 28/2/05 with effect from 01/03/2005 prevailing in the international markets do not (percent) (percent) cause undue hardships to the consumers. Customs Duty Further on 19/08/2004 the Government Petrol 15 10 reduced Customs duty by 5% in respect of Diesel 15 10 Petrol, Diesel. SKO (PDS) and LPG SKO(PDS) 5 Nil (Domestic) and Excise Duty by 3% on Petrol LPG(Domestic) 5 Nil and Diesel and by 4% in respect of SKO Others 20 10 (PDS). Excise Duty 8.4.5.6 However, the international prices went Petrol 23+Rs.7.50 P.L. 8+Rs.13 P.L. up further during the month of October, 2004. Diesel 8+Rs.1.50 P.L. 8+Rs.3.25 P.L. With the under-recoveries on petrol and diesel SKO(PDS) 12 Nil mounting, further increases were announced LPG(Domestic) 8 Nil effective 5-11-2004. Retail selling price of Education Cess @ 2% is leviable on the above rates.

72 Public Enterprises Survey 2004-05 : Vol.-I (vi) POWER connected therewith or incidental thereto. However, at present the CERC constituted 8.4.6 The power tariff for the sale of power under the ERC Act, 1998 as also its powers by the generation company to the in terms of regulation/ determination of State distribution company and to other persons tariff of the Central Government owned is determined/regulated as per the terms companies involved in generation and inter- and conditions notified by the Government transmission have been retained. of India vide its notification dated 30th March, 1992 and subsequent amendments made 8.4.6.3 As per the Electricity Act, 2003, the therein from time to time. Regulatory Commission shall be guided by Electricity Tariff Policy to be notified by the 8.4.6.1 In 1998, the Electricity Regulatory Central Government in near future. Commission Act was enacted for creation of Regulatory Commissions at the Centre and (vii) PHARMACEUTICALS in the States with powers inter-alia to 8.4.7 For fixations of prices of regulate/determine traiff. Under the pharmaceutical products in Central Public provisions of the Act, the Central Sector Enterprises (CPSEs), the Drugs Price Government created Central Electricity Control Order (DPCO), 1995 is followed. As Regulatory Commission (CERC) which per DPCO, the pharmaceutical products are regulate/determine traiff of the Central categorized as Scheduled and Non- Government owned companies engaged in Scheduled formulations. The prices of generation and inter-state transmission. Scheduled products are fixed by the CERC also issued order on availability National Pharmaceutical Pricing Authority Based Tariff for ensuring grid discipline. (NPPA) under the provisions of DPCO. The 8.4.6.2 The power sector reforms effected in Maximum Retail Prices (MRP) of Scheduled recent years necessitated the enactment of formulations are fixed and revised as per the Electricity Act, 2003 and repeal of the announcement/notification by the ERC Act, 1998. The provisions of the Government of India. Electricity Act, 2003 serve to consolidate the 8.4.7.1 In case of Non-scheduled laws relating to generation, transmission, formulations the prices are fixed by the distribution, trading and use of electricity. CPSEs on cost plus basis. The Act is aimed at taking measures B. PURCHASE PREFRENCE POLICY conducive to development of electricity industry, promoting competition therein, 8.5 The policy of purchase preference for protecting interest of the consumers and products and services of Central Public supply of electricity to all areas, Sector Enterprises (CPSEs) by Government rationalization of electricity tariff, ensuring Departments/Organisations and other transparent policies regarding subsidies, CPSEs was introduced in 1992 by replacing promotion of efficient and environmentally the earlier policy of both price and purchase benign policies, constitution of Central preference operating since 1971. The Electricity Authority, Regulatory underlying objective of this policy is to enable Commissions and establishment of CPSEs to adjust to the new environment of Appellate Tribunal and for matters competitiveness and market mechanism in

Socio-Economic and Welfare Measures 73 the wake of liberalization/globalization and to Policy, fails to perform, it should also be assist these enterprises in improving their subject to payment of liquidated damages or profitability by better utilization of their any other penalty included in the contract. installed capacities. 8.5.4 Each Ministry shall make a list of 8.5.1 The purchase preference policy (PPP) CPSEs that would require PPP support and was initially made applicable for a period of if there is no possibility of making a positive three years. However, over the period of time list, they may attempt a negative list of CPSEs it has been reviewed and extended from time which may not require PPP support. to time with or with out certain modifications. 8.5.5 Ministry of Power will be granted The policy was last reviewed by the exemption from the PPP, subject to the Government in June, 2005 and extended vide condition that they will place certain orders O.M. dated 18.07.2005 it with certain upon BHEL on a negotiated basis price modifications for a period of three years benchmarked through competitively bid beyond 31.3.2005 with clear stipulation that projects every year. Ministry of Power and the policy will be terminated with effect from Department of Heavy Industry will work out, 31.3.2008. at the beginning of the year, the number and 8.5.2 As per PPP if the price quoted by a value of the orders to be placed upon BHEL CPSE/subsidiary company is within 10% of during the financial year. the evaluated valid price bid (L 1), purchase 8.5.6 All Ministries /Departments/ CPSEs / preference will be granted to the enterprise Autonomous Bodies except Ministry of Power concerned at L 1 price. Joint ventures with will continue to grant purchase preference private partners are not eligible for availing to CPSEs/subsidiary companies. Respective of purchase preference.Provisions for Ministries /Departments / CPSEs / purchase preference will be made in tenders Autonomous Bodies will be responsible for including civil works and turnkey contracts implementing the Purchase Preference of Rs. 5 crore and above but not exceeding Policy in letter and in spirit. For any deviation Rs. 100 crore. A minimum value addition of including exclusion of the purchase 20% will be ensured by the CPSEs for preference clause from NIT, it will be availing of purchase preference. obligatory on the concerned Ministry/ 8.5.3 PSEs should be subject to the same Department / CPSE / Autonomous Body to qualification process as any other bidder. If obtain prior exemption from the Cabinet in the PSE does not meet the minimum consultation with the Department of Public qualifications, it should be subject to Enterprises. disqualification. However, in suitable cases, 8.5.7 The cases which were under the purchasers / clients may relax the consideration from 1.4.2005 till the date of condition of “net worth” from the list of issue of the order extending the policy would minimum qualifications. If the PSE, which has stand covered under the policy except those had the benefit of the Purchase Preference which have already been decided otherwise.

74 Public Enterprises Survey 2004-05 : Vol.-I 9 PRODUCTIVITY IN PUBLIC ENTERPRISES

9.1 Productivity is a measure of assessment of the management of the efficiency with which an enterprise is enterprises has been used. In the case of managed. It is the relationship between the multiple-product units, the capacity figures output generated by a production unit and have been adopted with reference to major the input provided for the purpose. It is a products. measure of efficient use of resources in the 9.3 A detailed enterprise-wise statement production of various goods. Among several (Statement No.23) indicating the major measures, capacity utilization is one of the products in the manufacturing profile, output sound indicators for measuring the efficiency of such products and the capacity utilization of manufacturing units. There are various for the last three years is given in Part-IV of factors like technology employed, state of this Volume. Cognate group-wise analysis of the plant and machinery, inventory the enterprises/units and extent of utilisation management, work methods, management are given in the following paragraphs. practice and work ethics which affect capacity utilization. STEEL 9.2. For the purpose of the Survey, the 9.3.1 Seven public enterprises were ratio of utilization has been derived on the operating in this group during the year 2004- basis of installed/rated capacity. However, in 05. The Information on capacity utilization in some cases where for various reasons the respect of all these units is presented in the installed/rated capacity is not available, the Table below:-

Name of Enterprises Product Capacity utilization (%) 2004-05 2003-04 2002-03 Steel Authority of India Ltd. Integrated Steel Plants Saleable Steel 104 104 97 Crude Steel 101 99 92 Alloy Steel Plant Saleable Steel 87 69 61 Ferro Scrap Nigam Ltd. Scrap Recovery 100 135 114 Indian Iron and Steel Co. Ltd. Steel Ingots 36 30 33 Saleable Steel 34 30 35 Maharashtra Elektrosmelt Ltd. Ferro Manganese and - 62 67 Silicon Manganese Ltd. Super Alloys 49 67 72 Ltd. Saleable Steel 119 119 115 Liquid Steel 119 117 112 Sponge Iron India Ltd. Sponge Iron - 116 119

9.3.1.1 During the year, there is an increase crude steel and 11.03 million tonnes of in the production of steel by SAIL. The steel saleable steel during the year 2004-05, plants produced 12.10 million tonnes of recording an overall capacity utilization of

Productivity in Public Enterprises 75 101% and 104% respectively. The produced 1337 MT of alloys during 2004-05 corresponding figures for the previous year with 49 per cent utilization of the capacity were 11.83 million tonnes of crude steel and as against a production of 1819 MT in the 11.026 million tonnes of saleable steel with previous year at 67 percent of the capacity. capacity utilization of 99% and 104% 9.3.1.5 The Rashtriya Ispat Nigam Ltd. respectively. produced 3.56 lakh tonnes of liquid steel 9.3.2 The Alloy Steel plant at and 3.17 lakh tonnes of saleable steel and the Salem Steel Plant together during 2004-05 as against a production of produced 3.79 lakh tonnes of saleable steel 3.51 lakh tonnes of liquid steel and 3.17 lakh as compared to the previous year's tonnes of saleable steel during the previous production of 2.98 lakh tonnes. year. 9.3.3 The Indian Iron and Steel Co. Ltd. Minerals and Metals produced 3.57 lakh tonnes of crude steel 9.4.1 Nine public enterprises were operating and 2.74 lakh tonnes of saleable steel in the Minerals and Metals group during the during 2004-05 as compared to 3.01 lakh year 2004-05. The information in respect of tonnes of crude steel and 2.58 lakh tonnes two are not available and the information in of saleable steel during the previous year. respect of the remaining seven enterprises is 9.3.1.4 The Mishra Dhatu Nigam Ltd. presented in the Table below: -

Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Bharat Refractories Ltd. Bricks and Masses 48 39 26 Ltd. KCC-Cathodes 51 64 77 Wire Rod 46 47 51 Ltd. Limenite 90 89 74 Rutile 68 66 56 Zircon 102 103 98 Kudremukh Iron Ore Ltd. Iron Ore Concen. 65 76 83 Iron Ore Pellets 95 92 86 Manganese Ore (India) Ltd. Manganese Ore 100 118 106 Elect. Mon Diox 112 97 93 Ferro Manganese 103 109 60 National Aluminium Co. Ltd. Bauxite 101 100 100 Calcined Alumina 100 98 94 Aluminium Metal 98 104 8 Power (Net) 101 105 88 National Mineral Dev. Iron Ore 110 103 109 Corporation Ltd. Diamonds 93 85 100

76 Public Enterprises Survey 2004-05 : Vol.-I 9.4.1.1 National Aluminium Company Ltd. ore during 2004-05 against the production produced 3.385 lakh tonnes of aluminium of 7.99 lakh tonnes during the previous year. metal during the year 2004-05 as against The production of bricks and masses by the 2.982 lakh tonnes during the previous year. Bharat Refractories Ltd. during the year The production of calcined alumina and 2004-05 was 65485 MT with capacity bauxite was 15.667 lakh tonnes and 48.52 utilization of 48% as compared to 53116 MT lakh tonnes with capacity utilization at 100% with capacity utilization of 39% during the and 101% respectively. previous year. There is an improvement in 9.4.1.2 The National Mineral Development the capacity utilization as compared to the Corporation Ltd. produced 207.43 lakh MT previous year. of iron ore during the year 2004-05 as 9.4.1.5 The Indian Rare Earths Ltd. compared to 179.59 lakh MT in the previous produced 417275 MT ilmenite, 16317 MT year. The production of diamonds at Panna rutile and 23376 MT zircon during the year unit was 78217 carats as against 71163 2004-05. The corresponding figures for the carats of previous year. previous year were 414631, 15753 and 9.4.1.3 The Hindustan Copper Ltd. 23634 MT respectively. produced 24186 tonnes of cathode and Coal and Lignite 27423 tonnes of wire rod during 2004-05 as 9.5.1 Nine public enterprises were compared to 30598 tonnes of cathode and operating in the Coal and Lignite group 28003 tonnes of wire rod during the previous during the year 2004-05. The information on year respectively. capacity utilization in respect of all these 9.4.1.4 The Manganese Ore India Ltd. units is presented in the Table below:- produced 9.43 lakh tonnes of manganese

Name of Enterprise Product Capacity utilization (%) 2004-05 2003-03 2002-03 Ltd. Raw Coal 64 64 74 Ltd. Raw Coal 74 99 90 Eastern Coalfields Ltd. Raw Coal 82 85 83 Ltd. Coal 100 102 101 Northern Coalfields Ltd. Coal - 112 106 Ltd. Coal 115 105 97 Ltd. Coal 113 105 104 Ltd. (Total) Coal - 90 89 Neyveli Lignite Corpn. Ltd. Lignite 90 86 78

9.5.1.1 The total production of raw coal by 05 as compared to 20.56 MT during the Coal India Ltd. including its seven coal previous year. producing subsidiaries during the year 2004- Power 05 was 323.58 million tonnes as compared 9.6.1 Six public enterprises are engaged in to 306 million tonnes in the previous year. the generation of power. The information in 9.5.1.2 The Neyveli Lignite Corporation Ltd. respect of one of them is not received. In produced 21.57 MT of lignite during 2004- addition, the Neyveli Lignite Corporation Ltd.

Productivity in Public Enterprises 77 has a thermal power station as one of its these enterprises for the last 3 years is given units. The capacity utilization in respect of in the Table below : -

Name of Enterprises Product Capacity utilization (%) 2004-05 2003-04 2002-03 National Hydroelectric Electricity Generation Power Corporation Ltd. Bairasiul 95 94 96 Salal 100 100 95 Tanakpur - 115 92 Chamera 89 124 117 Uri - 132 81 NTPC Ltd. Gross Generation (PLF) 88 84 84 NEEPCO Ltd. Energy Generation 93 78 57 Neyveli Lignite Corpn. Ltd. Power -TPS-I 81 84 83 -TPS-II 72 78 82 Nuclear Power Corpn. Ltd. Generation of Power 91 90 Satluj Jal Vidyut Nigam Ltd. Power Generation 85 100 -

9.6.1.1 The power generated by NTPC has Neyveli Lignite Corpn. Ltd. generated gone up to 159110 MUs during the year 16746.38 million units during 2004-05 as 2004-05 as compared to previous year's against 16388.98 million units during 2003-04. generation of 149161 MUs. The plant load 9.6.1.4 The Satluj Jal Vidyut Nigam Limited factor (PLF) during the year 2004-05 was which was commissioned in May, 2004 87.51% as against 84.40% in the previous generated 5147.35 MU of electricity during year. 2004-05 as against 1195.93 MU during the 9.6.1.2 The North Eastern Electric Power previous year. Corporation Ltd. generated 5195.46 million Petroleum units during 2004-05 as compared to 4148.20 million units during the previous 9.7.1 Fourteen public enterprises are year, showing an increase of 25%. operating in the Petroleum sector. Information in respect of them is given in the 9.6.13 The thermal power stations of the Table below:

Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Bharat Petroleum Corpn. Ltd. Refinery 132 127 126 Bongaigaon Refinery and Refinery 93 85 62 Petrochemicals Ltd. Chennai Petroleum Corpn. Ltd. Refinery 85 94 97 GAIL (India) Ltd. LPG 94 93 95 Propane - 78 60 Ethylene - 92 104 Hindustan Petroleum Corpn. Ltd. Mumbai 111 111 110 Visakh 104 101 91

78 Public Enterprises Survey 2004-05 : Vol.-I Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Indian Oil Blending Ltd. Lubricating Oil 88 94 98 Greases 93 90 87 Indian Oil Corpn. Ltd. Barauni 85 72 71 Gujarat 85 93 91 Guwahati 100 89 46 Haldia 90 75 98 Mathura 80 103 103 Panipat 106 106 102 Digboi 100 92 89 IBP Co. Ltd. Explosives 43 61 65 Cryo-containers 63 45 64 Kochi Refineries Ltd. Refinery 106 105 101 MRPL Refinery 122 104 75 Numaligarh Refinery Ltd. Refinery 68 73 63 Oil and Natural Gas Corpn. Crude Oil NA NA NA Natural Gas NA NA NA VAP 99 104 108 Oil India Ltd. Crude Oil 94 88 86 LPG 99 101 106 Natural Gas 124 117 107

9.7.1.1 The Bharat Petroleum Corporation compared to 6.11 MMT and 7.59 MMT Ltd. processed 9.14 million tonnes of crude respectively during the previous year during 2004-05 as aganist 8.76 million 9.7.1.6 The IBP Co. Ltd. produced 51204 tonnes during 2003-04. MT of industrial explosives and 10381 9.7.1.2 The crude throughput for the cryocontainers during 2004-05 as compared Bongaigaon Refinery and Petrochemicals to 52266 MT of industrial explosives and Ltd. during 2004-05 was 2.18 million MT as 7496 cryocontainers during the previous against 2.00 million MT during the previous year. year. 9.7.1.7 The Indian Oil Blending Ltd. 9.7.1.3 The Chennai Petroleum Corpn. Ltd. produced 1.98 lakh KL lubricating oil during processed 8.923 million MT crude during the 2004-05 at 88% capacity utilization as year 2004-05 as against 7.039 million MT against a production of 2.11 lakh KL during processed during the previous year. 2003-04 a capacity utilization of 94%. The 9.7.1.4 The GAIL (India) Ltd. produced production of greases was 12959 MT during 10.94 lakh MT of LPG during 2004-05 as 2004-05 as compared to 12607 MT in the against a production of 10.89 lakh MT during previous year. the previous year. 9.7.1.8 The combined throughput by the 9.7.1.5 The Mumbai refinery of Hindustan seven refineries of the Indian Oil Corporation Petroleum Corporation Ltd. processed 6.12 Ltd. during the year 2004-05 was 36.63 MMT of crude oil during the year 2004-05 million tonnes as against the previous year's and Visakh refinery processed 7.82 MMT as throughput of 37.66 million tonnes. The

Productivity in Public Enterprises 79 overall capacity utilization during 2004-05 meters during the previous year. was 88.59% as compared to 91% during the 9.8.1.12 Oil India Ltd. produced 3.20 MMT previous year. Capacity utilization was lower crude oil during 2004-05 as against 3.00 due to extended shut down maintenance of MMT of the previous year. The production Mathura Refinery and closure of catalytic of LPG was 49.5 KMT as against 51.51 KMT unit at Gujarat refinery. during the previous year. The production of 9.7.1.9 The Kochi Refineries Ltd. processed natural gas was 2.01 BCM during 2004-05 7.924 million MT of crude oil during 2004- as against 1.89 BCM during the previous 05 as against 7.853 million MT during the year. previous year. The capacity utilization during 9.7.1.13 The production of gas and the year was 105.65% as compared to the condensate by ONGC (Videsh) Limited was previous year's figure of 105%. 1349038 M and 39104 MT during 2004-05 9.7.1.10 During the year 2004-05, the as against production of Gas 523383 M and Numaligarh refinery processed 2.04 MMT of condensate 21822 MT during the previous crude as compared to 2.20 MMT in the year. previous year. The capacity utilization has Fertilizers declined from 73% in the previous year to 9.8.1 Eight public enterprises are engaged 68% during 2004-05. in the production of fertilizers. Out of them, 9.7.1.11 The crude oil production by the Oil in case of Fertiliser Corporation of India Ltd., and Natural Gas Corporation Ltd. (incl. JVs) Hindustan Fertiliser Corporation Ltd. and during the year 2004-05 was 28.13 million Pyrite, Phosphates and Chemicals Ltd., the MT as against a production of 27.72 million Government has decided to close the MT during the previous year. Natural gas operations. The capacity utilization by the production during 2004-05 was 25.23 billion remaining five enterprises during the last 3 cubic meters as against 25.70 billion cubic years is given in the Table below:-

Name of Enterprises Product Capacity utilization (%) 2004-05 2003-04 2002-03 Brahmaputra Valley Fertiliser Corpn. Ltd. Urea 75 89 59 Fertilizers and Chemicals Travancore Ltd. - Ammonia Udyogamandal Division Sulphate - 84 81 Cochin Division NP 20:20 - 89 106 Petrochemical Division Caprolactam - 83 81 Madras Fertilisers Ltd. Ammonia 87 75 76 Urea 97 80 82 NPK 40 51 49 National Fertilisers Ltd. Urea 106 101 99 Rashtriya Chemicals and Thal -Urea 105 99 90 Fertilisers Ltd. Thal - Ammonia 107 103 89 Trombay Ammonia 85 75 83 Trombay Suphala 47 99 10 Trombay ANP 62 65 69

80 Public Enterprises Survey 2004-05 : Vol.-I 9.8.1.1 The Brahmaputra Valley Fertiliser ing the previous year. Corpn. Ltd. produced 2.03 lakh MT urea dur- 9.8.1.4 The Thal unit of Rashtriya Chemicals ing 2004-05 as compared to 2.41 lakh MT and Fertilizers Ltd. produced 17.90 lakh MT urea during the previous year. and 10.59 lakh MT ammonia during the year 9.8.1.2 The Madras Fertilizers Ltd. produced 2004-05 as against 16.87 lakh MT Urea and 3.01 lakh tonnes ammonia, 4.73 lakh tonnes 10.15 lakh MT ammonia during the previous urea and 3.33 lakh tonnes NPK during 2004- year. The Trombay unit produced 2.53 lakh tones 05 with capacity utilization of 87%, 91% and of ammonia, 3.50 lakh tones Suphala and 2.23 40% respectively. The corresponding produc- lakh MT ANP during the year. tion figures for the previous year were 2.60 Chemicals and Pharmaceuticals lakh tonnes ammonia, 3.88 lakh tonnes urea 9.9.1 There are 18 public enterprises and 4.29 lakh tones NPK with capacity utili- operating in the Chemicals and zation of 75%, 80% and 51% respectively. Pharmaceuticals sector. The information in 9.8.1.3 The National Fertilisers Ltd. produced respect of four of them is not received. 34.32 lakh MT of urea during 2004-05 as Details of capacity utilization in respect of 14 against the production of 32.50 lakh MT dur- of them are given below:-

Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Bengal Chemicals and Pharmaceuticals Ltd. Tablets 69 57 49 Hair oil 87 63 61 Capsules 65 94 85 Disinfectant 103 93 84 Bharat Immunologicals and Biologicals Corporation Ltd. Oral Polio vaccine 20 12 21 Hindustan Antibiotics Ltd. Vials 53 26 24 Tablets 67 79 48 Capsules 39 33 25 IV Fluids 76 74 70 Hindustan Fluorocarbons Ltd. PTFE 14 53 80 CFM-22 6 72 103 Hindustan Insecticides Ltld. DDT Tech 64 70 46 Alwaye Mono Chrotophos 115 172 130 Form Dicofol 47 61 63 Endosulfan Tech 28 97 96 Rasayani DDT Form 67 65 42 Malathion Tech 32 56 54 HOC Ltd. and Udyog Mandal Aniline 64 58 64

Productivity in Public Enterprises 81 Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Formal dehyde 99 104 63 Phenol 121 100 106 Acetone 123 102 108 Acids 79 83 82 Nitro products 47 51 49 Indian Drugs and Pharmaceuticals Ltd. Tablets - 7 6 Capsules - 1 3 Syrup - 2 1 Indian Medicines and Pharmaceuticals Ayurvedic and Corpn. Ltd. Unani 40 40 34 Karnatak Antibiotics and Pharmaceuticals Ltd. Capsules 132 149 152 Liquids/Parenterals 87 88 104 Tablets 57 63 57 Dry Syrup/Vails - 46 40 Dry Powder Vails 103 94 76 Orissa Drugs and Pharm. Ltd. Tablets NA - - 32 Capsules - - 80 Ampoules - - 10 Projects and Development India Ltd. Catalyst 29 80 37 Rajasthan Drugs and Pharmaceuticals Tablets 126 116 137 Ltd. Capsules 73 60 146 Powder 61 134 132 Liquids 82 67 80 Vials 39 42 40 Sambhar Salts Ltd. Processed Salt 31 32 56 U.P. Drugs and Pharm. Ltd. Liquids 77 23 22 Tablects 58 40 50 Capsules 66 100 125 Powder 57 28 5

99.1.1 The Bengal Chemicals and tablets, 983.30 lakh capsules and 91.55 lakh Pharmaceuticals Ltd. produced 32450 lakh IV fluids during 2004-05. The comparative nos.capsules and 698.70 KL hair oil during figures for the previous year were 347.46 2004-05 against 471.50 lakh nos. capsules lakhs, 1905.30 lakhs, 813.12 lakhs and and 503 KL hair oil product during the 88.54 lakhs respectively. previous year. 9.9.1.4 The production of PTFE and CFM in 9.9.1.2 The Bharat Immunological and Hindustan Fluorocarbons during 2004-05 Biologicals corporation Ltd. supplied 119.60 was 70 MT and 80 MT in the previous year. million doses of oral polio vaccine during the 9.9.1.5 The production of Acids, Phenol, year 2004-05 as against 70 million doses of Acetone in HOC Ltd. during the year was oral polio vaccine during the previous year. 48701, 48403, 30277 MT respectively as 9.9.1.3 The Hindustan Antibiotics Ltd. compared to previous year's production of produced 484.29 lakh vials, 1816.61 lakh 52364, 40094, 25057 MT respectively.

82 Public Enterprises Survey 2004-05 : Vol.-I 9.9.1.6 The Hindustan Insecticides Ltd. 9.9.1.11 Rajasthan Drugs and produced 4087 MT of DDT (Tech) and 8500 Pharmaceuticals Ltd. produced 378.14 MT of DDT (Form) during the year 2004-05 million tablets during 2004-05 as compared as compared to 4471 MT of DDT (Tech) and to 347.68 million tablets of previous year. 8223 MT of DDT (Form) in the previous year. The production of liquid orals has increased 9.9.1.7 Hindustan Salts Ltd. produced 0.32 to 328.38 KL during 2004-05 from 269.53 lakh MT common salt during the year 2004- KL of previous year. 05 as against 0.57 lakh MT during the 9.9.1.12 U.P. Drugs and Pharmaceuticals previous year. The Sambhar Salts Limited Ltd. produced 79.73 million capsules and produced 3738 MT processed salt during 269.23 KL of liquids during 2004-05 against the year 2004-05 as against 3941 MT in the previous year. 120.42 million capsules and 102.89 KL of liquids of previous year. The variation is due 9.9.1.8 Indian Medicines and Pharmaceuticals to working capital constraints. Corporation Ltd. produced 260 items of Ayurvedic and Unani medicines during Heavy Engineering 2004-05 as against 259 items during 9.10.1 There are 10 public enterprises previous year. operating in the Heavy Engineering Group 9.9.1.9 Karnataka Anitbiotics and during 2004-05. Two of them, namely, Pharmaceuticals Ltd. produced 765 lakh Bharat Bharat Bhari Udyog Nigam Ltd. and tablets and 500 lakh capsules during 2004- Bharat Yantra Nigam Ltd. are holding 05 as compared to 845 lakh and 564 lakh companies and do not directly engage in respectively during the previous year. production activities. Information in respect 9.9.1.10 Projects and Development India of one is not received. Information in respect Ltd. has produced 362 MT catalyst during of remaining 7 companies is tabulated 2004-05 as against 982 MT of previous year. below:-

Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Bharat Heavy Electricals Ltd. Boilers 128 102 91 Power Transformers 93 88 85 Traction Machines 80 58 66 Hydro Sets 40 59 67 Bharat Heavy Plates & Vessels Ltd. Process Plants, Cryogenics and Combustion Systems 28 12 33 Bharat Wagon and Engg. Co. Ltd. Railway Wagons 18 11 37 Structural 0 0 18 Braithwaite and Co. Ltd. Steel Castings - 54 54 Burn Standard Comapny Ltd. Railway rolling stock 26 25 86 Bogies 23 23 10 Basic bricks 82 76 64 Heavy Engg. Corpn. Ltd. Casting, Forgings and Rolls15 12 10 M.M. Equip. and Struct. 14 9 11 Tungabhadra Steel Products Ltd. Hydro-Mech. Equip. 5 12 25

Productivity in Public Enterprises 83 9.10.1.1 BHEL has an annual capacity to and capacity utilization of 285 FWUs and manufacture 168500 MT of boiler and boiler 11% during the previous year. The Burn auxiliaries, the production of which was Standard Company produced 2226 FWUs 215586 MT during 2004-05 as against a wagons during the year 2004-05 against production of 171741 MT in the previous 2145 FWUs wagons in the previous year. year. The production of power transformers 9.10.1.4 In the case of Tungabhadra Steel was 14925 MVA as against a production of Products Ltd. the production during the year 14025 MVA in the year 2003-04. was 388 MT as against an installed capacity 9.10.1.2 In Heavy Engineering Corporation of 8213 MT and previous year's production Ltd. the production of machinery and of 933 MT. equipment was 5470 MT during 2004-05 as 9.10.1.5 In the case of BHPV, the against the previous year's production of production has gone up to 6431 MT during 3601 MT. The capacity utilization was 14% 2004-05 as against 2710 MT during the year as compared to 9% in the previous year. 2003-04. The production of castings, forging and rolls Medium and Light Engineering was 6507 MT during the year 2004-05 as compared to 5486 in the previous year. 9.11.1 Twenty-three public enterprises are operating in this group. Of them, only 17 9.10.1.3 The Bharat Wagon and Engg. Co. have furnished the requisite information. Ltd. produced 440 FWU wagons with 18% Details of capacity utilization in respect of capacity utilization as against a production them are given in the Table below: - Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Andrew Yule and Co. Ltd. Tea 69 69 73 Balmer Lawrie and Co. Ltd. Barrels/Drums 93 91 98 Lubricants and Greases 47 44 42 Leather Chemicals 136 116 118 Bharat Electronics Ltd. Electronics Equip. 160 139 125 Bharat Pumps 2and Compressors Ltd. Pumps/compressors 48 72 48 Gas Cylinders 19 13 18 Biecco Lawrie Ltd. Switchgears 82 72 57 Lubricating oil etc 41 39 16 Central Electronics Ltd. Solar PV Module/ Solar Cells 107 71 78 Axle counters 140 106 88 Hindustan Cables Ltd. Jelly Filled Cables - 4 33 HMT Machine Tools Ltd. Machine Tools 56 61 68 HMT Limited Tractors 31 31 35 HMT Bearings Ltd. Ball and Roller Bearings 35 41 38 HMT Watches Ltd. Watches 5 6 9 HMT Chinar Watches Watches 1 8 12 ITI Ltd. OCB-TAS/TAMDEM 87 77 122 OCB 283 Local 23 12 75 Instrumentation Ltd. RAX/MAX 13 3 13

84 Public Enterprises Survey 2004-05 : Vol.-I Name of Enterprise Product Capacity utilization (%) 2004-05 2003-04 2002-03 Process Control Valves 36 42 48 Electronic Range 1 1 1 Safety relief 11 6 10 Praga Tools Ltd. Machine Tools 82 78 50 Rajasthan Electronics and Instruments Ltd. Milk Testers 278 243 178 SPV Modules 242 228 172 Richardson and Cruddas (1972) Ltd. Fabrication 3 1 3

9.11.1.1 The Te a Division of Andrew Yule 10.72 lakh nos. bearings against installed and Co. Ltd. produced 77.09 lakh Kg of capacity of 31 lakh nos. The HMT Machine black tea during the year with a capacity Tools Ltd. produced 571 machine tools utilization of 69% as against a production during the year at a capacity utilization of and capacity utilization of 77.04 lakh Kg and 56%. The production of watches by HMT 69% during the previous year. Watches Ltd. was 2.99 lakhs against 9.11.1.2 Bharat Pumps and Compressors installed capacity of 65 lakhs. HMT Chinar Ltd. produced 105 pumps and compressors Watches Ltd. produced 41964 watches at capacity utilization of 48% against against installed capacity of 5492 lakhs installed capacity of 306. The corresponding during the year. production in the previous year was 263 with 9.11.1.7 The ITI Ltd. produced 524.18 KL capacity utilization of 86%. Biecco Lawrie OCB-CSN:MA&MM during the year as produced 1134 switchgears and 4138 KL against 465.50 KL during the previous year. lubricating oil during 2004-05 as against 996 The production was affected due to and 3886 KL in the previous year. inadequate orders for traditional switching 9.11.1.3 The Balmer Lawire and Co. Ltd. and transmission products. produced 35.24 lakh barrels/drums during 9.11.1.8 Under telecom products (RAX/SBM 2004-05 as against 34.32 lakh during the RAX) Instrumentation Ltd. has provided previous year. In the case of greases and lubricants the production during 2004-05 23000 lines against the installed capacity of was 0.34 lakh MT as against 0.32 lakh MT 770000 lines during the year 2004-05 as during the previous year. compared to 102000 lines in the previous year. 9.11.1.4 In Bharat Electronics Ltd. the value of production during the year 2004-05 was 9.11.1.9 Praga Tools Ltd. produced 246 Rs. 3112.09 crore as against Rs. 2798.59 machine tools during 2004-05 against 225 crore in the previous year. machine tools in the previous year. The capacity utilization increased to 82% during 9.11.1.5. The Central Electronics Ltd. the year as compared to 78% in the produced 2149 KW of SPV modules during previous year. the year 2004-05 as against a production of 1419 KW during the previous year. 9.11.1.10 Rajasthan Electronics and 9.11.1.6 The HMT Ltd. (holding company) Instruments Ltd. produced 4861 electronic produced 7007 tractors during the year milk analysers, 22819 SPV modules 2004-05 as against 5601 during the systems and 119 electronic energy meters previous year. HMT Bearings Ltd. produced during the year 2004-05. The corresponding

Productivity in Public Enterprises 85 figures for the previous year were 3561, in the previous year. The fall in the capacity 17178 and 9039 respectively. The utilization is due to poor order book position. production is flexible depending upon the Transportation Equipment order book position and type of products. 9.12.1 There are 10 public enterprises 9.11.1.11 Richardson and Cruddas has belonging to this group. The position of provided 2302 MT structurals/ fabrication/ capacity utilization in respect of these galvanizing during 2004-05 against 3440 MT companies is given in the Table below:

Name of Enterprises Product Capacity utilization (%) 2004-05 2003-04 2002-03 Bharat Earth Movers Ltd. Earth Mov. Equip. 69 48 49 Railway Prod. 86 81 20 Tatra trucks 100 82 54 Central Inland Water Transportation cargo 21 64 73 Transport Corpn. Ltd. Ship repairing 69 102 82 Ltd. Shipbuilding 42 17 45 Garden Reach Shipbuilders and Engineers Ltd. Shipbuilding fabrication 54 56 38 Ltd. Shipbuilding and Repair 53 30 41 Hindustan Aeronautics Ltd. Military and Civil Engg. Equipments 95 94 91 Hindustan Shipyard Ltd. Shipbuilding 42 14 17 Hooghly Dock and Port Shipbuilding 29 59 42 Engineers Ltd. Ship repair 167 47 73 Mazagon Dock Ltd. Ship construction 76 33 33 Scooters India Ltd. 3-Wheelers 78 94 85

9.12.1.1 The number of earth moving Rs. 432.40 lakh with capacity of 69% during equipment produced by Bharat Earth the year as against Rs. 563 lakh with Movers Ltd. during 2004-05 was 692 as capacity of 102% during the previous year. compared to 484 in the previous year. The 9.12.1.3 Garden Reach Shipbuild and capacity utilization during the year was 69% Engineers Limited built 2939 tonnes of ship as against 48% during the previous year. during 2004-05 as against 3043 tonnes in The number of railway equipment produced the previous year. during the year was 342 as against 323 in the previous year, with respective capacity 9.12.1.4 The Hindustan Aeronautics Ltd. utilization of 86% and 81%. achieved the Standard Man Hours (SMH) output of 259 during 2004-05 with capacity 9.12.1.2 The Central Inland Water utilization of 95% as compared to 247 with Transport Corporation Ltd. has made capacity utilizatio of 94% in the previous year. transportation cargo in IWT route to the tune 9.12.1.5 The Hindustan Shipyard Ltd. built of 54502 M/ T at capacity utilization 21% 1.47 pioneer class vessels of 21500 DWT during the year. Value of ship repairing was

86 Public Enterprises Survey 2004-05 : Vol.-I each during the year 2004-05 as against 2004-05 with capacity utilization of 76% as 0.49 in the previous year and against an against 3.16 ship units with capacity installed capacity of 3.5 pioneer class utilization of 33% during the previous year. vessels of 21500 DWT. 9.12.1.8 The Scooters India Ltd. produced 9.12.1.6 The shipbuilding in Hooghly Dock 12863 three-wheeler scooters during 2004- and Port Engineers Ltd. during the year 05 as against 15494 in the previous year. 2004-05 was 321 tonnes as against 653 Consumer Goods tonnes in the previous year. It repaired 25 9.13.1 There are 11 enterprises producing ships during 2004-05 as against 7 in the consumer goods. Information relating to previous year. capacity utilization is available in respect of 9.12.1.7 The Mazagon Dock Ltd. 7 enterprises only. The position is given in constructed 8.92 ship units during the year the Table below:-

Name of Enterprises Product Capacity utilization (%) 2004-05 2003-04 2002-03 Cement Corpn. of India Ltd. Cement 21 15 14 Hindustan Latex Ltd. Contraceptive/ Condoms 138 128 121 Steroidal OCP 193 183 167 Hindustan Newsprint Ltd. Newsprint 112 113 101 Hindustan Paper Corpn. NPM-Paper of Newspaper 106 113 106 CPM-Paper/Newsprint 91 97 94 Hindustan Photofilms Mfg. Co. Ltd. Cine Products, X-Ray Films, Paper products etc. 2 5 4 NEPA Ltd. Newsprint 25 26 23 Tyre Corporation of India Ltd. Automotive Tyre 26 73 55

9.13.1.1 The Cement Corporation of India during the year 2004-05 was 197312 MT as Ltd. produced 8.06 lakh MT cement during compared to 210015 MT during the previous the year 2004-05 recording 21% capacity year. utilization as compared to a production and 9.13.1.4 The Hindustan Newsprint Ltd. capacity utilization of 5.85 lakh MT and 15% produced 112200 MT newsprint during respectively during the previous year. 2004-05 as against 112555 MT during the 9.13.12 The Hindustan Latex Limited previous year against the installed capacity produced 925.97 million pieces of condoms of 1 lakh MT. during the year 2004-05 as compared to 9.13.1.5 In Hindustan Photofilms 856.18 million pieces in the previous year. Manufacturing Co. Ltd. production during the The production of copper-T, steroidal OCP year 2004-05 was 0.81 M. Sq. M as against and blood bags have also recorded increase 1.70 M.Sq. M during the previous year. during the year. 9.13.1.6 The NEPA Ltd. produced 21680 9.13.1.3 The combined production of paper MT newsprint during 2004-05 as against and newsprint by the Nagaon and Cachar 22450 MT during the previous year. Mills of Hindustan Paper Corporation Ltd.

Productivity in Public Enterprises 87 9.13.1.7 Tyre Corporation of India produced 9.14.1 The consolidated position of capacity 6171 MT automotive tyres as compared to utilization for the year under review along 17006 MT during the previous year. with that for the previous two years is Macro Picture of Capacity Utilisation presented in the Table below: -

Description 2004-05 2003-04 2002-03 Units which have recorded 75% or more 98(58) 87(53) 84(54) capacity utilization Units which have recorded 50% or more but 28(17) 32(19) 29(19) less than 75% capacities utilization Units which have recorded less than 50% 42(25) 47(28) 41(27) capacity utilization Total 168(100) 165(100) 154(100)

(Figures in brackets show percentages.) · Strengthening of MOU system · Periodic performance review by the 9.14.2 Ninety eight units, i.e. 58% of the administrative Ministries and Inter operating units in respect of which Ministerial Committee. information is available, achieved 75% or · Delegation of enhanced powers to more capacity utilization during the year Board of Directors of Navratna, Miniratna PSEs and profit making 2004-05 as against 53% during the previous PSEs. year. The number of units operating at 50% · Professionalisation of Board of or more but less than 75% was 28 as Directors and induction of eminent compared to 32 in the previous year. Twenty persons as Independent Directors. five percent of the units operated at below · Setting up of Board for 50% of their capacity during 2004-05. While Reconstruction of Public Sector most of the units belonging to the minerals Enterprises (BRPSE) to consider and metals, coal, power, petroleum and revival/restructuring of sick and loss fertilisers sectors have achieved 75% or making CPSEs more capacity utilization during the year, · Training and human resource many units belonging to the chemicals and development. petrochemicals, engineering, transportation · Diversification of product-mix. equipments and consumer goods sectors · Technology upgradation, research operated at lower capacity. and development. Steps Taken for Performance · Better house keeping and improved Improvement maintenance management practices 9.15.1 Some of the measures taken by the · Greater emphasis on energy conservation. Government and the management of the public · Export promotion. enterprises to improve the performance of public enterprises are as under: · Improved inventory control.

88 Public Enterprises Survey 2004-05 : Vol.-I 10 ENERGY CONSERVATION IN PUBLIC SECTOR

10.1 Energy is an essential input in the play in this area because it is the major production activities. Rapid increase in consumer of commercial energy. The energy demand and consumption in the manufacturing sector can achieve substantial industrial and service sectors have resulted saving in the consumption of energy by in the gradual depletion of the reserves. adopting energy efficient methods. The main Thus energy conservation has assumed reasons for higher consumption of energy are considerable importance. Setting up of obsolete technology, lower capacity utilization, additional capacity is not only capital casual monitoring of energy consumption, intensive but also time consuming. On the lower automation, low quality of raw material other hand, the additional investments that and poor operating and maintenance may be required for energy conservation practices. measures would be much less and the 10.3 The following table gives the pattern results would be available within a short of energy consumption by manufacturing units period. belonging to different cognate groups during 10.2 Industrial sector has a major role to the last 2 years.

Cognate Group Consumption of energy Energy cost as % age (Rs. in crore) of cost of production 2004-05 2003-04 2004-05 2003-04

Steel 2613.40 2545.39 9.20 10.37

Mineral & Metals 1274.62 1164.54 22.41 22.85

Coal & Lignite 1616.43 1498.67 6.27 6.62

Power 13929.46 12400.20 56.19 49.88

Petroleum 1129.20 1029.56 0.31 0.37

Fertilizer 2198.81 1941.72 20.19 19.52

Chemicals & Pharmaceuticals 100.91 123.93 6.78 8.31

Heavy Engineering 271.96 251.05 2.66 3.06

Medium & Light Engineering 123.27 129.42 1.35 1.56

Transportation Equipment 143.57 141.88 1.80 2.08

Consumer Goods 238.18 226.81 11.64 11.16

Agro based Industries 5.66 5.07 3.16 2.73

Textiles 104.62 108.19 3.53 3.66

Energy Conservation in Public Sector 89 10.4 Energy conservation measures taken consumption in Steel Authority of India Ltd. by some of the major public sector (four integrated steel plants) during 2004-05 enterprises during the year 2004-05 and the was 7.29 Gcal per tonne of crude steel as compared to 7.46 Gcal per tonne of crude results achieved thereof are given in the steel during 2003-04. following paragraphs. 10.4.1.1 Details of energy consumption per STEEL tonne of production are as under : 10.4.1 The overall specific energy

Description Steel Alloy & Spl. Steel 2004-05 2003-04 2004-05 2003-04 Purchased electricity (KWH) 495 498 1023 1225 Fuel Oil (Litres) 2 2 68 84 Coking Coal (Kgs) 1080 1130 — — Coke (Kgs) 46 7 328 419 Non-Coking Coal (Kgs) 86 77 — —

10.4.1.2 Some of the important energy conservation schemes undertaken by the - Replacement of recuperators of furnace company are : No.6. 10.4.2 The Rashtriya Ispat Nigam Ltd. has - Propane gas for scarfing to replace taken various measures towards energy acetylene gas. conservation, but due to the problems faced - Installation of blast furnace gas burners with the availability of major raw materials in Boiler-6 of PBS to replace coal. namely Coke and Iron ore, the specific energy consumption increased from 6.27 Gcal per tonne of liquid steel in 2003-04 to 6.33 Gcal per - Commissioning of multi-slit burners in tonne of liquid steel in 2004-05. Sinter band No.2 and No.3. 10.4.2.1 Details of energy consumption per - Installation of stainless steel sheet in the combustion chamber wall of stove No.4 tonne of production are as under : of blast No.3. Description 2004-05 2003-04 - Provision of duplex burners in Kin No.5 Coking Coal (Kgs) 893.55 942.00 to fire tar along with gas. Coke (Kgs) 130.89 82.80 - Coal dust injection system in BF 5. Boiler Coal (Kgs) 400.68 405.97 Furnace Oil (litres) 0.19 0.29 - Automation and implementation of Electricity (Kwh) 22.96 26.60 process heating model for reheating furnace of Section mill. Minerals and Metals - Implementation of on-line delay strategy 10.5.1 In Kudremukh Iron Ore Company Ltd model in ‘A’-Furnace of wheel and axle the consumption of electricity per tonne of plant.

90 Public Enterprises Survey 2004-05 : Vol.-I pellets during 2004-05 was 32.11 kwh as · Optimal control of mill level, mill outlet against 31.89 kwh in the previous year. In temperature etc., which contributed to the the case of concentrate the energy stability of furnace and reduction in Boiler consumption was higher at 94.84 kwh/T in trip outs. 2004-05 as against 79.13 kwh/T in 2003-04. · Suitable modification in Secondary This was due to lower productivity, hard ore Auxiliary air damper control circuit which and also due to restriction on mining in the reduced the secondary air fluctuation already broken up area. during a mill trip. 10.5.2 The National Aluminum Company iii) Operation of Condensate Polishing Unit Ltd. continues to give importance to energy resulted in the following advantages – conservation measures for all its operations. Accordingly, the Company has gone for the · Filter water consumption has reduced; latest technology with installation of energy burden on DM plant and water intake was efficient equipment for expansion project of therefore less. all units. Periodical review and monitoring of · Higher DM water temperature from CPU energy consumption took place at regular enhanced the Boiler Cycle efficiency and intervals at all units. Some of the important there is reduction in coal consumption. energy conservation measures undertaken Smelter: by the company during the year are given below: i) Variable frequency drive has been Alumina Refinery installed in Anode Handling De-dusting unit to optimize the speed. Energy saving i) Specific Coal consumption with respect has been achieved. to Alumina as well as Hydrate reduced through the following measures – ii) In Strip Casting Plant, atomizing compressed air pressure has been · Optimal control of secondary air to optimized by reducing RPM by resizing achieve efficient and complete motor and changing pulley. combustion inside the furnace. · Improvement in Milling system output by iii) Automatic control of Cooling tower fan regular classifier cleaning and other motors has been done through proactive maintenance and time based temperature controller. replacement of critical spare parts like iv) Reduction in lighting power consumption gearbox. has been done in Cast House – B by · Replacement of inefficient impellers of PA voltage control of lighting transformer. fans in each overhauling. Captive Power Plant · Time based replacement of AH baskets, i) Cooling Tower –3 Fan, fan blades which resulted in effective heat transfer replaced with energy efficient ENCON from fuel gas to Air, and thereby reduction make blades. in coal consumption. ii) U#6 Auxiliary Oil Pump-1 replaced with ii) Reduction in total number of Boiler tripping in the year 2004-05 has reduced energy efficient KSB, Germany make by 17.46% over the previous year which pump. was achieved through – iii) With optimization of process parameters

Energy Conservation in Public Sector 91 it has been possible to generate full load Petroleum by running 3 Mills instead of 4. 10.7.1 The Bharat Petroleum Corporation iv) Power has been saved by installing 2x300 Ltd. continued its efforts for energy TR VAM in place of Chiller conservation both in terms of improvement Compressor. in operations/ maintenance as well as development of new projects. Continuous V) Making the functioning of oil water monitoring of fuel consumption and separator pit effective to reclaim and hydrocarbon loss is undertaken using reuse fuel oil in the boilers resulting in sophisticated instruments and data direct saving of fuel oil. acquisition system. An elaborate energy accounting system and management Coal and Lignite information system are important features in 10.6.1 The energy conservation measures BPCL refinery. Commissioning of highly taken by the Neyveli Lignite Corporation Ltd energy efficient integrated crude and during the year are as under: vacuum units, provision of 25 fibre reinforced plastic blades in lieu of existing Mines sector aluminium blades in air-fin coolers in the (i) Variable speed drive has been introduced catalytic cracking unit and high vacuum unit, in the Main Slewing and major frictional de-coking of furnaces in heavy crude unit, mechanical elements of the BWE 1355 replacement of leaky steam traps, etc are to avoid frictional loss and thereby save some of the energy conservation measures energy; taken during the year. (ii) Computerised energy management 10.7.2 The Bongaigaon Refinery & Petrochemicals Corporation Ltd. has system has been introduced in 230 KV/ adopted various energy conservation 11 KV sub station from 17.12.2004. measures in the plant/processing complex to Power sector make the operations more efficient. The (i) Dyno Drives in the raw coal feeders for important schemes undertaken during the year are (i) destaging of two numbers of speed control were replaced with Variable wash water pump from 12 to 9 stage in frequency drives in few boilers, Cooling CDU-II was done in October,2004 & Tower Fan Motors with 243 KW were December, 2004 respectively resulted in drop replaced with 200 KW high efficiency of current by 12 ampere; (ii) diversion of REP motors. drinking water reservoir overflow to cooling (ii) Energy efficient lighting system timers water sump resulted in the water saving of have been provided for all critical 30 M3/hr which was implemented in August, locations. 2004; (iii) reinsulation of 400 m process steam line with better insulation material – (iii) Auxiliary power consumption was Perlite and calcium silicate; (iv) replacement contained to 11.41% in Station-I and of metallic fin fan cooler blades with FRP 9.78% in Station-II against the norm of blades of 14-E-29-B1 and 14-E-32A in DCU- 12% by taking up various energy I resulted in drop of current by 5.0 & 8.0 conservation measures. ampere respectively.

92 Public Enterprises Survey 2004-05 : Vol.-I 10.7.3 Important energy conservation compressed oil survey and remedial schemes undertaken by Chennai Petroleum measures taken to arrest air leaks. Corporation Ltd. during the year include (i) (ii) Reduced specific stem consumption to the Refinery Linear Programming model is 292 MT/TMT during the year 2004-05 extensively utilized to optimize various as compared to 305 MT/TMT during the process units, to maximize profit with energy previous year. conservation as focus; (ii) as part of the long- term efforts to plan and implement energy (iii) Steam leak joint survey was carried out conservation techniques in a sustainable during the oil conservation fortnight in manner, CPCL is participating in the January, 2005. benchmarking exercise by M/s. Shell Global 10.7.5 Kochi Refineries Ltd. continues to Solutions Inc., for Manali Refinery to identify bestow utmost importance to conservation of the gaps in each area for further corrective energy by regular monitoring and analysis of action; (iii) CPCL is also embarking on plans fuel and utilities consumption, optimizing plant to use Natural Gas as fuel in place of Fuel oil, as it offers the advantages of being a operations and proper upkeep of plant and clean environment friendly fuel; and (iv) a machinery. During the year 2004-05, the comprehensive plan of action to reduce the purchased power is more as compared to the fuel and loss levels gradually in the next five- previous year due to the shut down of GT for year period is being worked out. repairs. The major energy conservation measures undertaken during the year 2004- 10.7.4 Mumbai and Visakh refineries of the Hindustan Petroleum Corporation Ltd. have 05 are: accorded highest priority to energy · Replacement of metallic blade with Fibre conservation and have undertaken several Reinforced Plastic blade in CE7A/B air energy conservation measures by fin fans on a trial basis, at an investment operational improvements and implementing of Rs.0.11 Million with an expected energy conservation projects. These include: savings of Rs.0.26 Million per annum. Mumbai Refinery · Using hot condensate for production of (i) Optimization of GTG load and reduced bitumen emulsion as part of Bitumen specific energy consumption from Emulsion project with an expected 0.373 to 0.365 kg of fuel per unit of savings of Rs.0.15 Million per annum. power generation in CPP. · Replacement of conventional burners (ii) Modified PDU steam condensate in EH1 heater with low Nox burners. recovery system and reduced process · Additional investments are being steam consumption by 2 tons/hr. implemented for reduction of energy (iii) Organised oil conservation fortnight consumption viz., insulation of plant fuel during January, 2005 to generate mass tank, condensate recovery from awareness in public for conservation of Vacuum Residue/Plant fuel tank farm petroleum products. and internal coating of cooling water Visakh Refinery: pump to improve pump efficiency etc. (i) Carried out refinery’s comprehensive

Energy Conservation in Public Sector 93 10.7.6 The Indian Oil Corporation continued Fertilizers and Chemicals its efforts in energy conservation and 10.8.1 The Fertilizers & Chemicals implemented a number of energy conservation Travancore Ltd. has modified the steam schemes during the year. Major schemes network system of Udyogamandal Division implemented are: – which resulted in steam saving at the rate of · Yield and energy optimization revamp of 2-4 MT/hr of 14 ATA steam. Steam CDU at Mathura refinery; requirements of ammonium sulphate plant · Installation of new 2x50 TPH boilers at was partially met by re-using 8 ATA steam Guwahati Refinery; and which would have been vented otherwise. · Recovery of Hydrogen from low 10.8.2 The consumption of energy (Gcals) pressure off gases of OHCU at Panipat per tonne of production of urea by different Refinery plants of National Fertilizers Ltd. was as under: These m easures have resulted in fuel savings of about 24,000 tonnes per year. 10.7.7 As a part of Numaligarh Refineries 2004-05 2003-04 Ltd.’s continual efforts towards energy Nangal 9.639 9.580 conservation and loss control, the following Panipat 9.955 9.705 new Encon schemes have been taken up for Bathinda 9.720 9.758 implementation during the year 2004-05:- Vijaipur-I 6.043 5.815 · Implementation of Advanced Process Vijaipur-II 5.629 5.469 Control (APC) in CDU/VDU to optimize Product recovery and improve Product 10.8.2.1 The energy conservation schemes yields. implemented in Nangal, Panipat and Bathinda · Providing special type of Telescopic plants are replacement of governors, Insulation for all the 150 numbers of provision of variable speed coupling for major Catalyst Tubes, which is expected to pumps/fans, and upgradation of save around 600 MT of fuel per year. instrumentation. Replacement of condensing steam turbine with motor for CW pumps, · Installation of 12 MW Steam Turbo installation of additional trays, installation of Generator (STG) for utilizing surplus vacuum pre-concentrator in Urea plant, etc. steam and recovering power from are some of the measures taken in the Vijaipur PRDS. The project is expected to plant. recover around 14000 MWH of energy through PRDS as well as utilize the total 10.8.3 The Rashtriya Chemicals and Fertilizers Ltd. has undertaken various energy surplus steam of the refinery. savings schemes due to which energy cost · During the Oil & Gas Conservation as percentage of total cost of production has Fortnight in the month of January, 2005, reduced. These include use of extraction a joint team of CHT conducted Steam steam for atomization of naphtha burners, Leak survey. Remedial actions have installation of Magnetic resonator for steam been taken for all the identified leaks. generation, revamping of Old HP Nitric Acid

94 Public Enterprises Survey 2004-05 : Vol.-I Plant for reduction of Electrical Energy, use 10.9.2 The energy conservation measures of energy efficient lamps, improvement of taken by Bharat Electronics Ltd. during the power factor and monitoring of maximum year 2004-05 are: demand, installing micro processor based · Automation of air compressor system; energy meters for all feeders and major electrical drives for close monitoring, etc. · Extensive replacement of conventional fittings by energy efficient lighting 10.8.3.1 The consumption of energy per unit fixtures; of production was 6.477Gcal during 2004-05 as compared to 6.574 Gcal during the · Installation of additional automatic previous year. power factor improvement controllers; 10.8.4 The Madras Fertilizers Ltd. has · Energy audit by TERI and taken extensive turnaround and preventive implementation of the recommendations; maintenance measures during the year. The · Incorporation of energy savers for overall energy consumption level per unit of discharge lamps. production was as under:- As a result of these measures, the Product 2004-05 2003-04 consumption of electricity per each lakh Ammonia rupee of production is reduced to 198 kwhrs during 2004-05 as compared to 217 kwhrs Electricity (KWH) 123.942 122.833 during the previous year. Fuel oil+LSHS (MT) 0.2095 0.2127 10.9.3 The Bharat Earth Movers Ltd. has Naptha (MT) 0.7575 0.7784 taken the following measures during 2004-05 Urea for energy conservation: Electricity (KWH) 171.494 177.553 · Round the clock monitoring of the Fuel oil+LSHS (MT) 0.1177 0.1324 hanger lights and controlling them to barest necessity; Engineering · Decentralisation of compressed air 10.9.1 Bharat Heavy Electricals Ltd. has system by providing portable worked out a 5 years plan for energy conservation and its efficient use aiming at compressors, wherever possible; 30% reduction in energy consumption as · Shutting of electrical machinery/ related to turnover. Containing energy cost alliances during unproductive hours; on a continuous basis, optimal utilization of · Improving the efficiency of DG sets by resources, general awareness of importance proper tuning and adjusting the fuel of energy conservation, improved house system and eliminating the overheating keeping and improved operational practices of DG engines by proper cooling are some of the steps towards energy arrangements. conservation. Energy audits in various units are regularly being conducted. The energy 10.9.4 The ITI Ltd. has taken energy cost as a percentage of turnover (net of conservation measures like creating excise) has improved to 2.62 as against 2.86 awareness among staff to conserve energy, in the previous year. use of energy saving equipments, etc.

Energy Conservation in Public Sector 95 CONSUMER GOODS and fans. The consumption of electricity per 10.10.1 The Hindustan Paper Corporation MT of production during 2004-05 was 1859 Ltd. has implemented the measures Kwh as against 2073 Kwh in the previous year. suggested by M/s DSCL Energy Services Ltd. CONCLUSION In-house energy conservation task forces have 10.11 As could be seen from the above identified schemes for conservation of power, analysis the central public sector enterprises water and steam. Energy managers are are conscious of the need to conserve energy appointed at both Nagaon Paper Mill and and have taken various steps for efficient use Cachar Paper Mill. The schemes of energy for various operational and auxiliary implemented during the year are (i) wet fly ash purposes. Regular maintenance of plant & handling system to dry type, (ii) oxygen machinery, replacement of energy inefficient trimming control mechanism to reduce dry equipment by better ones, effective recovery flue gas loss of C&C flaker heater and (iii) two of waste-heat, prevention of leakage, stage heating at recovery boiler. modifications in the design of plant/ 10.10.2 The Hindustan Newsprint Ltd. has machinery and other equipment, energy audit conducted a detailed energy conservation and creation of awareness among study in the mill, focusing on pumps and fans employees and general public are the and identifying energy saving potential by important areas which should receive installing electronic variable frequency drives adequate attention for speed control of motors, driving pumps

96 Public Enterprises Survey 2004-05 : Vol.-I MANAGEMENT OF INVENTORIES 11 IN PUBLIC SECTOR ENTERPRISES

11.1 Materials management plays a analysis and a company-wise position of significant role in improving the operational inventories. efficiency and profitability of an enterprise. It 11.2 The materials management in public helps in achieving higher return on enterprises has improved over the years. The investment by minimizing locked up working inventory level, which was 179 days cost of capital and also in improving the cash flow production/turnover as on 31.3.1970 has and liquidity position. Materials management, declined to 42 days cost of production/ therefore, requires to be given adequate turnover as on 31.3.2005. The overall position importance in the present context where the of inventory management during the last thrust is on performance improvement. An three decades is depicted in the Table attempt has been made in this chapter to 11.1 below: present an overview, cognate group-wise

Table 11.1 Year ending Value of Cost of Inventory in Inventory Prodn./ No. of days (Rs. in crore) Turnover Cost of Prodn./ (Rs. in crore) Turnover

31.3.1970 892 1814 179 31.3.1975 2698 8118 121 31.3.1980 6223 20110 113 31.3.1985 12639 49804 93 31.3.1990 21868 96118 83 31.3.1991 24938 106283 86 31.3.1992 27341 119432 84 31.3.1993 32580 131958 90 31.3.1994 32773 137713 87 31.3.1995 33770 159425 77 31.3.1996 37477 195105 70 31.3.1997 40815 206658 72 31.3.1998 41661 218940 69 31.3.1999 44404 278720 58 31.3.2000 52414 354446 54 31.3.2001 50717 425100 44 31.3.2002 52175 431362 44 31.3.2003 58282 466444 46 31.3.2004 59705 513334 42 31.3.2005 73814 625432 42

Cognate Group : Management of Investment in Public Sector 97 11.2.1 The above figures do not include GROUP-WISE ANALYSIS inventories held by the Food Corporation of 11.3 The public enterprises have been India, the Cotton Corporation of India Ltd. and the Jute Corporation of India Ltd. as grouped into various cognate groups these Corporations make large scale depending upon the nature of their activities. purchases and maintain stocks. Further, the The analysis of inventory management is public sector enterprises operating in based on these groupings. The inventory Industrial Development and Technical position in each of the cognate groups for the Consultancy Services, Tourist Services, Financial Services as well as Section 25 last two years is indicated in the Table 11.2 Cos. have also been excluded from the below: review in this chapter.

Table 11.2

Cognate Group Inventory as on 31.3.2005 Inventory as on 31.3.2004 Value No. of days Value No. of days (Rs. in crore) Cost of (Rs. in Cost of Production/ crore) Production/ Turnover Turnover

(a) Enterprises producing and selling goods 1. Heavy Engg. 3142.22 110 2303.84 101 2. Medium & Light Engg. 2595.75 104 2599.47 115 3. Mineral & Metals 1152.22 74 1025.45 73 4. Fertilizers 1326.76 44 1341.88 49 5. Chemicals & Pharmaceuticals 199.56 48 189.48 49 6. Steel 5834.48 75 4032.42 60 7. Transportation Equipments 7583.36 347 6174.86 330 8. Consumer Goods 376.82 66 354.97 65 9. Petroleum 42273.06 40 32482.32 38 10. Agro-Based Industries 69.06 169 78.44 181 11. Coal & Lignite 2802.81 40 2494.52 40 12. Textiles 148.73 23 163.43 25 13. Power 2208.42 27 2209.33 32 Total 69713.25 48 55450.41 47 (b) Enterprises rendering services 14. Transportation Services 577.72 9 581.68 11 15. Trading and Marketing Services 646.48 6 810.95 10 16. Contract & Construction Services 444.68 51 429.26 58 17. Telecommunications and Information Technology Services 2432.36 23 2433.01 24 Total 4101.24 14 4254.90 17

Grand Total 73814.49 42 59705.31 42

98 Public Enterprises Survey 2004-05 : Vol.-I 11.3.1 In the manufacturing sector, the level inventory in terms of number of days of inventory has gone up from 47 days as remained unchanged in the case of Coal & on 31.3.2004 to 48 days as on 31.3.2005. Lignite sector. In the service sector, the level of inventory has declined from 17 days as on 31.3.2004 HEAVY ENGINEERING to 14 days as on 31.3.2005. It may be observed that there is marginal reduction in 11.3.2 The value of inventory held by the 8 the level of inventory in terms of number of public enterprises belonging to this group days cost of production/services rendered in except the two holding companies viz. sectors viz. Medium & Light Engineering, BBUNL and BYNL which do not have any Fertilizers, Chemicals and Pharmaceuticals, inventory holding, was Rs. 3142.22 crore Agro-based Industries, Textiles, Power, representing 110 days cost of production as Transportation Services, Trading and on 31.3.2005 as against a total inventory Marketing Services, Contract & Construction valued at Rs. 2303.84 crore representing Services and Telecommunications and 101 days cost of production as on Information Technology Services sectors. 31.3.2004. The value of inventory held by The level has gone up in the case of Heavy individual enterprises together with the level Engineering, Mineral & Metals, Steel, of inventory in terms of number of days cost Transportation Equipments, Consumer of production for the last two years is given Goods and Petroleum sectors. The level of in Table 11.3 below:

Table 11.3

S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04

1. Bharat Heavy Electricals Ltd. 2916.11 2103.88 117 106 2. Bharat Heavy Plate & Vessels Ltd. 69.96 33.98 122 66 3. Bharat Wagon & Engg. Co. Ltd. 6.27 4.27 79 66 4. Braithwaite & Co. Ltd. 14.19 10.58 90 75 5. Burn Standard Company Ltd. 27.18 29.41 40 48 6. Heavy Engineering Corpn. Ltd. 101.45 103.22 93 137 7. Triveni Structurals Ltd. NA NA NA NA 8. Tungabhadra Steel Products Ltd. 7.06 18.50 44 142 Total 3142.22 2303.84 110 101

11.3.2.1 Of the 8 companies, 3 could reduce enterprises of this group as on 31.3.2005 the level of inventories during 2004-05 as was Rs. 2595.75 crore representing 104 compared to the previous year while in the days cost of production as compared to Rs. case of 4 companies there has been increase in the level of inventory. Triveni 2599.47 crore representing 115 days cost of Structurals Ltd. has not furnished information production held by them as on 31.3.2004. for 2004-05. The company-wise inventory position for the MEDIUM & LIGHT ENGINEERING last two years is depicted in the Table 11.4 below: 11.3.3 The value of inventories held by 25

Cognate Group : Management of Investment in Public Sector 99 Table 11.4

S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1 2 3 4 5 6 1. Andrew Yule & Co. Ltd. 24.34 22.06 45 50 2. Antrix Corpn. Ltd. 0.00 0.00 0 0 3. Balmer Lawrie & Co. Ltd. 79.12 63.53 30 26 4. Bharat Dynamics Ltd. 384.62 358.27 290 282 5. Bharat Electronics Ltd. 1064.95 1015.40 149 159 6. BEL Optronics Ltd, 13.90 0.00 140 - 7. Bharat Pumps & Compressors Ltd. 17.82 14.67 89 83 8. Biecco Lawrie Ltd. 7.88 4.78 80 60 9. Central Electronics Ltd. 19.36 28.19 89 160 10. Electronics Corpn. of India Ltd. 66.23 107.11 36 53 11. Hindustan Cables Ltd. 36.07 50.17 47 53 12. HMT Bearings Ltd. 6.88 7.68 71 86 13. HMT Chinar Watches Ltd. 6.49 6.48 90 101 14. HMT Ltd. 41.33 42.41 56 74 15. HMT Machine Tools Ltd. 120.25 101.97 127 123 16. HMT Watches Ltd. 47.41 58.54 116 130 17. I.T.I Ltd. 552.83 637.53 96 137 18. IDPL (Tamilnadu) Ltd. 3.07 0.00 376 - 19. Instrumentation Ltd. 63.09 40.24 106 86 20. National Instruments Ltd. 2.22 2.22 150 151 21. Praga Tools Ltd. 4.35 5.57 33 47 22. Rajasthan Electronics & Instruments Ltd. 6.81 6.60 45 47 23. Richardson & Cruddas (1972) Ltd. 14.40 15.34 88 91 24. Semi-Conductor Complex Ltd. 8.84 7.85 47 34 25. Vignyan Industries Ltd. 3.48 2.86 71 80 Total 2595.75 2599.47 104 115

11.3.3.1 Out of 25 companies, 15 could re- (Tamilnadu) Ltd. have been included in the list duce the level of inventories during 2004-05 of operating CPSEs for the first time. There- as compared to the previous year while in the fore, the level of inventories has also been case of 7 companies there has been in- indicated first time. crease in the level of inventories. Antrix MINERALS & METALS Corpn. Ltd. did not hold any inventory 11.3.4 There were 10 companies operating whereas BEL Optronics Ltd. and IDPL in this group. The value of inventory held by

100 Public Enterprises Survey 2004-05 : Vol.-I these companies during the year 2004-05 the value of inventory was Rs. 1025.45 crore was Rs. 1152.22 crore representing 74 days representing 73 days cost of production. The company- cost of production. At the end of 2003-04, wise details are presented in the Table 11.5 below: Table 11.5 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Bharat Refractories Ltd. 21.77 20.07 60 66 2. FCI Aravali Gypum & Minerals (I) Ltd. 0.56 0.40 8 8 3. Hindustan Copper Ltd. 225.64 169.96 164 119 4 Indian Rare Earths Ltd. 69.08 89.04 113 143 5. J&K Mineral Dev. Corpn. Ltd. 0.01 0.01 5 3 6. Kudremukh Iron Ore Co. Ltd. 106.75 98.71 52 56 7. Manganese Ore (India) Ltd. 48.52 25.40 86 53 8. National Aluminium Co. Ltd. 529.06 480.48 76 76 9. National Mineral Dev. Corpn. Ltd. 117.11 118.38 39 47 10. Uranium Corporation of India Ltd. 33.72 23.00 58 45 Total 1152.22 1025.45 74 73 11.3.4.1 Of the 10 companies, 4 could the production of fertilizers. The value of reduce the level of inventories during 2004- inventory held by them as on 31.3.2005 was 05 as compared to previous year while in the Rs. 1326.76 crore representing 44 days cost case of 4 companies there has been of production as compared to an inventory increase in the level of inventories and in two value of Rs. 1341.88 crore representing 49 cases it remained unchanged. days cost of production at the end of FERTILIZERS previous year. Company-wise analysis of 11.3.5 There were 8 companies engaged in inventory is given in Table 11.6 below: Table 11.6

S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Brahmaputra Valley Fertilizer Corpn. 36.93 63.99 85 126 2. Fertilizers & Chem. (Travancore) Ltd. 228.89 196.86 62 61 3. Fertilizer Corpn. of India Ltd. 42.95 43.79 13 14 4. Hindustan Fertilizer Corpn. Ltd. 23.24 24.09 9 10 5. Madras Fertilizers Ltd. 209.98 229.18 57 70 6. National Fertilizers Ltd. 350.78 392.58 39 46 7. Pyrites, Phosphates & Chemicals Ltd. NA NA NA NA 8. Rashtriya Chemicals & Fertilizers Ltd. 433.99 391.39 60 66 Total 1326.76 1341.88 44 49

Cognate Group : Management of Investment in Public Sector 101 11.3.5.1 The value of inventories has companies in the group as on 31.3.2005 decreased in 6 public enterprises and amounted to Rs. 199.56 crore representing increased in case of 1 enterprise. Pyrites, 48 days cost of production as compared to Phosphates and Chemicals Ltd. did not Rs. 189.48 crore representing 49 days cost furnish information for 2004-05. of production at the end of 2003-04. An CHEMICALS & PHARMACEUTICALS enterprise-wise analysis of the inventory position is given in the Table 11.7 below: 11.3.6 The value of inventories held by 19

Table 11.7 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Bengal Chem. & Pharmaceuticals Ltd. 17.75 10.49 118 82 2. Bengal Immunity Ltd. - - - - 3. Bharat Immunologicals & Biologicals Ltd. 1.06 10.60 9 127 4. Hindustan Antibiotics Ltd. 16.79 16.69 57 47 5. Hindustan Insecticides Ltd. 46.79 51.72 94 103 6. Hindustan Flurocarbons Ltd. 7.34 7.55 102 109 7. Hindustan Organic Chemicals Ltd. 69.59 55.47 39 36 8. Hindustan Salts Ltd. 0.98 2.66 50 97 9. Indian Drugs & Pharmaceuticals Ltd. 9.45 10.90 13 14 10. Indian Medicines & Pharmaceuticals Corp. Ltd. 1.23 1.25 80 100 11. Karnataka Antibiotics & Pharma. Ltd. 15.75 10.54 69 54 12. Maharashtra Antibiotics & Pharma. Ltd. - - - - 13. Manipur State Drugs & Pharma. Ltd. - - - - 14. Orissa Drugs & Chemicals Ltd. NA NA NA NA 15. Projects & Development India Ltd. 8.28 6.86 85 64 16. Rajasthan Drugs & Pharm. Ltd. 2.82 2.73 69 63 17. Sambhar Salts Ltd. 1.73 2.02 74 85 18. Smith Stanistreet & Pharma. Ltd. - - - - 19. U.P. Drugs & Pharmaceuticals Ltd. - - - - Total 199.56 189.48 48 49

11.3.6.1 The level of inventory has increased been closed and U.P. Drugs & in case of 6 companies and decreased in Pharmaceuticals has been transferred to case of 7 companies during the year 2004- U.P. Govt. Hence, the level of inventories 05. Bengal Immunity Ltd., Maharashtra relating to these companies has not been Antibiotics & Pharmaceuticals Ltd., Manipur furnished. As regard, Orissa Drugs & Drugs & Pharmaceuticals Ltd. and Smith Chemicals Ltd., the Company has not Stanistreet & Pharmaceuticals Ltd. have furnished information for 2004-05.

102 Public Enterprises Survey 2004-05 : Vol.-I STEEL level of inventory has gone up from 60 days 11.3.7 The value of inventories held by 7 cost of production at the end of the previous companies was Rs. 5834.48 crore at the end year to 75 days cost of production at the end of 2004-05 as compared to Rs. 4032.42 of 2004-05. The company-wise position is crore held by them at the end of 2003-04. The indicated in the Table 11.8 below:

Table 11.8 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Ferro Scrap Nigam Ltd. 5.91 4.41 24 20 2. Indian Iron & Steel Co. Ltd. 222.43 147.12 48 51 3. Maharashtra Elektrosmelt Ltd. 44.95 25.14 88 77 4. Mishra Dhatu Nigam Ltd. 79.86 64.30 222 222 5. Rashtriya Ispat Nigam Ltd. 1255.31 706.34 80 63 6. Sponge Iron India Ltd. 5.33 3.67 37 32 7. Steel Authority of India Ltd. 4220.69 3081.44 75 59 Total 5834.48 4032.42 75 60

11.3.7.1 The level of inventories has equipments. The value of inventory held by decreased in 1 company and increased in these companies was Rs. 7583.36 crore the case of 5 companies during the year and during the year 2004-05 as against Rs. remained unchanged in the case of one 6174.86 crore during 2003-04. The level, company. which was 330 days cost of production at the TRANSPORTATION EQUIPMENTS end of previous year, has gone up to 347 days cost of production at the end of 2004- 11.3.8 10 public enterprises are engaged 05. The company-wise details are given in in the production of transportation the Table 11.9 below: Table 11.9 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Bharat Earth Movers Ltd. 620.80 573.26 146 131 2. Central Inland Water Transport Corp. 9.77 8.34 47 51 3. Cochin Shipyard Ltd. 169.17 68.94 202 106 4. Garden Reach Shipbuilders & Engrs. Ltd. 1226.47 1551.75 989 1177 5. Goa Shipyard Ltd. 49.32 24.95 128 49 6. Hindustan Aeronautics Ltd. 3508.64 2576.52 286 280 7. Hindustan Shipyard Ltd. 92.36 46.22 137 95 8. Hooghly Dock & Port Engineers Ltd. 97.04 94.03 563 544 9. Mazagon Dock Ltd. 1780.94 1203.77 1215 840 10. Scooters India Ltd. 28.85 27.08 81 70 Total 7583.36 6174.86 347 330

Cognate Group : Management of Investment in Public Sector 103 10.2 Of the 10 companies, the level of valued at Rs. 376.82 crore representing 66 inventory has reduced in 2 companies and days cost of production during the year increased in the case of 8 companies during 2004-05 as against an inventory valued at the year as compared to the previous year. Rs. 354.97 crore held by them during the CONSUMER GOODS previous year representing 65 days cost of production. The company-wise position is 11.3.8.1 The 11 companies belonging to the given in Table 11.10 below: consumer goods group held an inventory

Table 11.10 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04

1 Bharat Opthalmic Glass Ltd. NA NA NA NA

2. Cement Corpn. of India Ltd. 87.83 88.04 85 88

3. Hindustan Latex Ltd. 30.45 26.72 63 67

4. Hindustan Newsprint Ltd. 70.74 60.76 97 90

5. Hindustan Paper Corpn. Ltd. 159.36 145.37 110 98

6. Hindustan Photo Films Manfg. Co. Ltd. 11.13 14.15 8 11

7. Hindustan Vegetable Oils Corpn. Ltd. NA NA NA NA

8. Hooghly Printing Co. Ltd. 0.08 0.08 3 4

9. Nagaland Pulp & Paper Mills Ltd. 0.85 1.15 24 34

10. NEPA Ltd. 14.94 16.08 62 68

11. Tyre Corpn. of India Ltd. 1.44 2.62 7 12

TotaI 376.82 354.97 66 65

11.3.9.1 Of the 11 enterprises, the level of companies have inventory valued at Rs. Inventory has reduced in 7 enterprises and 42273.06 crore as on 31.3.2005 as gone up in the case of 2 enterprises. Bharat compared to Rs. 32482.32 crore at the end Opthalmic Glass Ltd. and Hindustan of previous year. The level of inventory was Vegetables Oils Corporation have not 38 days cost of turnover as on 31.3.2004 as furnished information for 2004-05. against 40 days cost of turnover as on PETROLEUM 31.3.2005. The company-wise details of inventories are presented in the Table 11.11 11.3.10 There are 14 companies operating below: in petroleum sector as on 31.3.2005. These

104 Public Enterprises Survey 2004-05 : Vol.-I Table 11.11 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1 Bharat Petroleum Copn. Ltd. 6258.56 4286.02 39 32 2. Bongaigaon Refinery & Petrochemicals 724.26 471.26 58 59 3. Chennai Petroleum Corpn. Ltd. 2416.15 1203.14 62 50 4. Gas Authority of India Ltd. 481.44 474.91 13 15 5. Hindustan Petroleum Corpn. Ltd. 5682.21 5402.53 35 39 6. Indian Oil Blending Ltd. 0.15 0.14 2 2 7. Indian Oil Corpn. Ltd. 19504.82 14951.08 52 47 8. I.B.P. Co. Ltd. 328.31 385.19 9 14 9. Kochi Refineries Ltd. 1383.08 871.02 38 32 10. Mangalore Refinery & Petrochemicals Ltd. 1911.62 1189.35 38 38 11. Numaligarh Refinery Ltd. 717.44 595.22 67 75 12. Oil & Natural Gas Corpn. Ltd. 2569.19 2405.69 20 27 13. Oil India Ltd. 260.78 221.50 24 26 14. ONGC Videsh Ltd. 34.95 25.27 12 59 Total 42273.06 32482.32 40 38

11.3.10.1 The level of inventory has come compared to Rs. 78.44 crore at the end of down in 8 enterprises and gone up in the the previous year. The level of inventories has case of 4 enterprises and remained decreased to the level of 169 days cost of unchanged in 2 public enterprises. turnover at the end of 2004-05 as compared AGRO-BASED INDUSTRIES to 181 days cost of turnover at the end of previous year. Details of inventory held by 11.3.11 The value of inventories held by 4 these enterprises are given in the Table 11.12 companies belonging to this group was Rs. below: 69.06 crore at the end of 2004-05 as

Table 11.12 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Andaman & Nicobar lsI. Forest & Plantation 0.90 1.67 61 89 2. National Seeds Corpn. Ltd. 13.28 11.39 61 47 3. North Eastern Regn. Agri. Mktg. Corpn. Ltd. 0.22 0.81 12 35 4. State Farms Corpn. of India Ltd. 54.66 64.57 347 437 Total 69.06 78.44 169 181

11.3.11.1 The level of inventory has COAL & LIGNITE come down in 3 public enterprises and has 11.3.12 The value of inventories held by 9 gone up in the case of 1 public enterprise. public enterprises belonging to this group as

Cognate Group : Management of Investment in Public Sector 105 on 31.3.2005 was Rs. 2802.81 crore as production as on 31.3.2005 as well as compared to Rs. 2494.52 crore at the end of 31.3.2004. Company-wise details are given previous year. The level of inventory in Table 11.13 below: remained unchanged i.e. 40 days cost of

Table 11.13 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-05 2003-04 2004-05 2003-04 1 2 3 4 5 6 1 Bharat Coking Coal Ltd. 451.84 433.18 44 54 2. Central Coalfields Ltd. 605.86 500.85 65 63 3. Coal India Ltd. 47.34 34.82 35 27 4. Eastern Coalfields Ltd. 309.28 260.41 29 27 5. Mahanadi Coalfields Ltd. 163.74 138.11 32 35 6. Neyveli Lignite Corpn. Ltd. 355.06 305.56 68 55 7. Northern Coalfields Ltd. 222.26 255.48 31 42 8. South Eastern Coalfields Ltd. 437.29 414.53 37 38 9. Western Coalfields Ltd. 210.14 151.58 22 18 Total 2802.81 2494.52 40 40

11.3.12.1 The level of inventories has this group was Rs. 148.73 crore at the end decreased in 4 PSEs and increased in 5 of 2004-05 as compared to an inventory of PSEs during the year as compared to Rs. 163.43 crore at the end of previous year. previous year. The level of inventory was 23 days cost of TEXTILES production during the year 2004-05 and 25 11.3.13 There are 15 companies in textile days at the end of previous year. The sector as on 31.3.2005. The value of company wise details are given in the Table inventory held by 11 companies belonging to 11.14 below:

Table 11.14 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Production (No. of days) 2004-03 2003-04 2004-03 2003-04 1 2 3 4 5 6 1. Birds, Jute & Exports Ltd. NA NA NA NA 2. British India Corpn. Ltd. NA NA NA NA 3. Brushware Ltd. NA NA NA NA 4. National Handlooms Dev. Corpn. Ltd. 0.33 0.37 0 0 5. National Jute Manufacturers Corpn. Ltd. 1.19 2.08 1 2 6. National Textile Corpn. Ltd. 0.00 0.00 - - 7. NTC (A. P., Karnataka, Kerala & Mahe) Ltd. 18.43 23.32 29 42

106 Public Enterprises Survey 2004-05 : Vol.-I 1 2 3 4 5 6 8. NTC (Delhi, Punjab & Rajasthan) Ltd. 14.88 14.60 44 43 9. NTC (Gujarat) Ltd. 2.46 3.70 11 15 10. NTC (Madhya Pradesh) Ltd. 2.09 4.54 9 24 11. NTC (Maharashtra North) Ltd. 22.62 28.26 25 31 12. NTC (South Maharashtra) Ltd. 34.07 35.09 38 38 13. NTC (Tamilnadu & Pondicherry) Ltd. 39.07 36.96 54 65 14. NTC (Uttar Pradesh) Ltd. 4.82 6.02 19 16 15. NTC (W. Bengal, Assam, Bihar & Orissa) Ltd. 8.77 8.49 37 35 Total 148.73 163.43 23 25 11.3.13.1 The level of inventories has come power generating corporationsas on down in 5 cases. In 3 cases level of inventory 31.03.2005 was Rs. 2208.42 crore as has gone up and in 1 case remained unchanged. NTC (Holding Co.) does not have compared to Rs. 2209.33 crore at the end of any production unit while Brushware Ltd., previous year. The level of inventory was 27 British India Corporation and Birds Jute & days cost of turnover as on 31.3.2005 as Exports Ltd. have not furnished any against 32 days cost of turnover as on information during 2004-05. 31.3.2004. The company wise break-up of POWER inventory is given in the Table 11.15 below: 11.3.14. The value of inventory held by 7 Table 11.15 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1. National Hydroelectric Power Corpn. Ltd. 90.02 80.37 23 23 2. National Thermal Power Corpn. 1777.66 1738.01 29 34 3. North Eastern Electric Power Corpn. Ltd. 88.90 72.18 41 39 4. NTPC Vidut Vyapar Nigam Ltd. 0.00 0.00 0 0 5. Nuclear Power Corpn. of India 216.48 228.64 24 21 6. Satluj Jal Vidyut Nigam Ltd. 33.36 90.13 11 152 7. Narmada Hydro Electric Development Corpn. 0.00 0.00 0 0 Total 2208.42 2209.33 27 32

11.3.14.1 The level of inventory has TRANSPORTATION SERVICES decreased in two PSEs and increased in two 11.3.15 There are 11 public sector PSEs and remained unchanged in the case enterprises operating in the transportation of one enterprise. NTPC Vidut Vyapar Nigam services sector. 0f the 11 companies, Air Transport Services Ltd. and Air India Ltd. and Narmada Hydro Electric Charters Ltd. did not hold any inventory. The Development Corporation Ltd. did not hold value of inventories held by remaining 9 any inventory. companies was Rs. 577.72 crore as on

Cognate Group : Management of Investment in Public Sector 107 31.3.2005 as compared to an inventory reduced from 11 days cost of turnover during valued at Rs. 581.68 crore at the end of the previous year to 9 days cost of turnover previous year. The level of inventory has in the current year. The company-wise details are given in the Table 11.16 below: Table 11.16 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1 2 3 4 5 6

1. Air India Ltd. 353.43 346.95 17 21

2. Air India Air Transport Services Ltd. 0.00 0.00 0 0

3. Air India Charters Ltd. 0.00 0.00 0 0

4. Airline Allied Services Ltd. 6.77 7.24 4 4

5. Airports Authority of India 3.90 4.08 1 1

6. Container Corpn. of India Ltd. 3.38 2.95 1 1

7. Dredging Corpn. of India Ltd. 13.54 9.18 9 6

8. Ennore Port Ltd. 4.79 4.79 19 20

9. Indian Airlines Ltd. 116.47 144.62 8 11

10. Helicopters Ltd. 25.01 20.01 45 40

11. Shipping Corpn. of India Ltd. 50.41 41.86 5 5 Total 577.72 581.68 9 11

11.3.15.1 The level of inventories has corporations keep stocks as deliberate declined in 3 cases and increased in 2 cases. policy. The ET&T Ltd. and Tea Trading The inventory level remained unchanged in Corporation of India Ltd. are under the case of 4 PSEs. process of winding up. As such, the analysis covers the remaining 11 companies only. The TRADING & MARKETING SERVICES 11 companies held inventory valued at Rs. 11.3.16 There were 14 companies in the 646.48 crore representing 6 days cost of Trading & Marketing Services group during turnover at the end of 2004-05 as compared the year 2004-05. Three companies namely to an inventory of Rs. 810.95 crore Food Corpn. of India, Cotton Corpn. of India representing 10 days cost of turnover at the and Jute Corpn. of India have been excluded end of previous year. The company-wise for the purpose of analysis as these details are given in the Table 11.17 below:

108 Public Enterprises Survey 2004-05 : Vol.-I Table 11.17 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Bharat Leather Corpn. Ltd. NA NA NA NA 2. Central Cottage Industries Corpn. 6.28 7.42 37 46 3. Central Warehousing Corpn. 3.92 5.46 3 5 4. Handicrafts & Handlooms Exports Corpn. 6.47 3.03 2 1 5. H.M.T. (International) Ltd. 0.57 0.18 7 2 6. MMTC Ltd. 110.89 162.55 3 6 7. MSTC Ltd. 72.18 149.27 5 16 8. North Eastern Handicrafts & Handlooms Corpn. Ltd. 0.98 0.77 44 48 9. PEC Ltd. 199.59 345.17 12 22 10. Spices Trading Corpn. Ltd. 5.66 1.17 5 1 11. State Trading Corpn. Ltd. 239.94 135.93 9 6 Total 646.48 810.95 6 10

11.3.16.1 While 6 companies could reduce companies, Mumbai Railway Vikas Corpn. the level of inventory, there has been an Ltd. did not hold any inventory. The value of increase in the case of 4 companies. Bharat inventories held by 9 companies in this group Leather Corporation Ltd. has not furnished was Rs. 444.68 crore as on 31.3.2005 as information for the year. compared to Rs. 429.26 crore held by them at the end of previous year. The level of CONTRACT & CONSTRUCTION SERVICES inventory has decreased from 58 days cost 11.3.17 There were 10 public sector of turnover to 51 days cost of turnover. The enterprises operating in the Contract & company-wise details are given in the Table Construction Services group. Of the 10 11.18 below:

Table 11.18 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1. BBJ Construction Co. Ltd. 13.14 10.02 113 129 2. Bridge & Roof Co. (India) Ltd. 216.54 223.06 178 221 3. Hindustan Prefab Ltd. 0.48 1.25 18 60 4. Hindustan Steelworks Constn. Ltd. 6.54 7.69 8 9 5. IRCON (International) Ltd. 41.37 58.94 16 29 6. Konkan Railway Corpn. Ltd. 61.27 25.85 82 40 7. Mineral Exploration Corpn. Ltd. 9.17 9.15 46 53 8. Mumbai Railway Vikas Corpn. Ltd. 0.00 0.00 0 0 9. National Bldg. Constn. Corpn. Ltd. 87.83 85.06 41 47 10. National Projects Constn. Corpn. Ltd. 8.34 8.24 10 10 Total 444.68 429.26 51 58

Cognate Group : Management of Investment in Public Sector 109 11.3.17.1 The level of inventory has come Telephone Nigam Ltd., Bharat Sanchar down in the case of 7 PSEs and gone up in Nigam Ltd. and Railtel Corporation India Ltd., case of one PSEs and remained unchanged belonging to this group held an inventory in one PSE. valued at Rs. 2432.36 crore as on 31.3.2005 TELECOMMUNICATIONS AND as compared to Rs. 2433.01 crore held by INFORMATION TECHNOLOGY them at the end of the previous year. Level SERVICES of inventory has come down from 24 days cost of turnover during 2003-04 to 23 days 11.3.18 There were 4 public sector cost of turnover in 2004-05. The company- enterprises operating in this group. wise details are given in the Table 11.19 Millennium Telecom Ltd. did not hold any below: inventory during the current year. Mahanagar

Table 11.19 S. Name of the Company Inventory Inventory/Cost of No. (Rs. in crore) Turnover (No. of days) 2004-05 2003-04 2004-05 2003-04 1. Bharat Sanchar Nigam Ltd. 2245.35 2343.75 25 27 2. Mahanagar Telephone Nigam Ltd. 186.60 88.79 12 5 3. RailTel Corporation India Ltd. 0.41 0.47 5 18 4. Millennium Telecom Ltd. 0.00 0.00 0 0

Total 2432.36 2433.01 23 24

11.3.18.1The level of inventory has de- creased in two cases during the year while in one case it has increased.

110 Public Enterprises Survey 2004-05 : Vol.-I 12 INTERNATIONAL OPERATIONS OF PUBLIC SECTOR ENTERPRISES

12.1 The enterprise-wise details of foreign 2004-05 and 2003-04 are given in the exchange earnings by the Central Public Statement 24 of the statement portion of this Sector Enterprises (CPSEs) by export of volume and the summary of the same is as goods and rendering services for the year follow—

Table 12.1 Foreign Exchange Earnings (Rs. in crore) Particulars 2004-05 2003-04 (i) By export of goods on FOB basis 39941.01 32976.64 (ii) Royalty, know-how, professional and consultancy fee 1079.50 173.20 (iii) Interest and Dividend 725.19 451.71 (iv) Other Income 518.25 1291.90 Grand Total 42263.95 34893.45

12.2 The enterprises where the increase 50.00 crore in 2004-05 as compared to and decrease in foreign exchange earnings 2003-04 are shown in the Table 12.2 and by export of goods/services is more than Rs. 12.3 respectively. Table 12.2 Increase in Foreign Exchange Earnings (Rs. in crore) Sl. No Name of the Enterprise 2004-05 2003-04 Increase 1. Kudremukh Iron Ore Company Ltd. 1410.03 855.09 554.94 2. National Aluminum Company Ltd. 2146.87 1723.54 423.33 3. National Mineral Development Corporation Ltd. 1071.43 762.60 308.83 4. Bharat Petroleum Corporation Ltd. 1944.56 1320.44 624.12 5. GAIL (India) ltd. 78.87 21.71 57.18 6. Hindustan Petroleum Corporation Ltd. 1943.51 1123.59 819.92 7. Kochi Refineries Ltd. 969.50 327.35 642.15 8. Mangalore Refinery and Petrochemicals Ltd. 6191.32 4477.45 1713.87 9. Oil and Natural Gas Corporation Ltd. 1210.49 374.41 836.08 10. ONGC Videsh Ltd. 1761.84 688.72 1073.12 11. Fertilizers & Chemicals (Travencore) Ltd. 128.39 38.36 90.03 12. Cochin Shipyard Ltd. 94.21 6.16 88.05

International Operations of Public Sector Enterprises 111 Sl. No Name of the Enterprise 2004-05 2003-04 Increase 13. MMTC Ltd. 3009.44 1870.16 1139.28 14. Air India Ltd. 4891.28 4157.33 733.95 15. Airports Authority of India Ltd. 913.20 787.08 126.12 16. Indian Airlines Ltd. 1515.02 1414.30 100.72 17. Shipping Corporation of India Ltd. 3411.61 3128.05 283.56

Table 12.3 Decrease in Foreign Exchange Earnings (Rs. in crore) Sl. No. Name of the Enterprises 2004-05 2003-04 Decrease 1. Rashtriya Spat Nigam Ltd. 259.27 780.91 521.64 2. Steel Authority of India Ltd. 1335.43 1688.39 352.96 3. Indian Oil Corporation Ltd. 3552.96 3637.26 84.30 4. Bharat Heavy Electricals Ltd. 1608.21 1763.70 155.49 5. Hindustan Aeronautics Ltd. 150.05 215.34 65.29 6. PEC Ltd. 795.48 1219.10 423.62 7. State Trading Corporation of India Ltd. 333.32 825.83 492.51 8. STCL Ltd. 87.26 193.03 105.77 9. Ltd. 160.08 224.23 64.15 10. RITES Ltd. 50.65 108.84 58.19 11. Telecommunications Consultants India Ltd. 279.66 370.44 90.78

12.3 The details of foreign exchange Statement 25 of the statement portion of this utilization by the enterprises for the year volume and the summary of the same is as 2004-05 and 2003-04 are given in the follows : Table 12.4 Foreign Exchange Utilisation (Rs. in crore) Particulars 2004-05 2003-04 (a) Imports (CIF Basis) Raw materials 135414.42 98489.82 Stores, Spares and Components 6040.83 4644.18 Capital Goods 5122.79 2188.15 Sub Total (a) 146578.04 105322.15 (b) Expenditure incurred in Foreign Currency on account of : Royalty, Know-how, Professional and Consultancy fee 4728.96 3940.48 Interest 1390.13 1447.55 Others 22031.58 22522.89 Sub Total (b) 28150.67 27910.92 Total (a+b) 174728.71 133233.07

112 Public Enterprises Survey 2004-05 : Vol.-I 12.4 The enterprises where the increase compared to 2003-04 are shown in the Table and decrease in foreign exhange utilization is 12.5 and 12.6 respectively. more than Rs.50.00 crore in 2004-05 as Table 12.5 Increase in Foreign Exchange Utilisation (Rs. in crore) Sl. No Name of the Enterprise 2004-05 2003-04 Increase 1. Indian Iron & Steel Company Ltd. 77.82 22.06 55.76 2. Rashtriya Ispat Nigam Ltd. 1747.45 993.18 754.27 3. Steel Authority of India Ltd. 4711.99 2555.58 2156.41 4. Narmada Hydro Electric Development Corporation Ltd. 160.56 74.60 85.96 5. National Thermal Power Corporation Ltd. 1551.87 1459.20 92.67 6. Nuclear Power Corporation of India Ltd. 924.10 548.05 376.05 7. Bharat Petroleum Corporation Ltd. 7425.42 4952.67 2472.75 8. Bongaigaon Refinery & Petrochemicals Ltd. 721.88 536.81 185.07 9. Chennai Petroleum Corporation Ltd. 9902.10 5326.77 4575.33 10. Indian Oil Corporation Ltd. 54467.71 39011.09 15456.62 11. Kochi Refineries Ltd. 7704.98 6158.71 1546.27 12. Mangalore Refinery & Petrochemicals Ltd. 10414.84 7695.74 2719.10 13. Numaligarh Refinery Ltd. 111.72 24.15 87.57 14. ONGC Ltd. 7124.48 4116.52 3007.96 15. Oil India Ltd, 262.53 140.58 121.95 16. ONGC Videsh Ltd. 2515.24 1138.06 1377.18 17. Fertilizers & Chemicals (Travencore) Ltd. 193.40 143.19 50.21 18. Rashtriya Chemicals & Fertilizers Ltd. 179.26 103.02 76.24 19. Bharat Heavy Electricals Ltd. 1772.11 1257.73 514.38 20. Bharat Dynamics Ltd. 149.17 76.51 72.66 21. I T I Ltd. 677.05 360.87 316.18 22. Cochin Shipyard Ltd. 260.69 71.14 189.55 23. Garden Reach Shipbuilders & Engineers Ltd. 146.20 58.45 87.75 24. Hindustan Aeronautics Ltd. 3647.28 2265.55 1381.73 25. Hindustan Shipyard Ltd. 140.56 26.68 113.88 26. Mazagon Dock Ltd. 167.98 88.28 79.70 27 MMTC Ltd. 11119.02 6759.65 4359.37

International Operations of Public Sector Enterprises 113 Sl. No Name of the Enterprise 2004-05 2003-04 Increase 28. MSTC Ltd. 4541.89 2662.97 1878.92 29. PEC Ltd. 5482.31 3960.24 1522.07 30. State Trading Corporation of India Ld. 6942.87 6593.06 349.81 31. STCL Ltd 138.16 13.82 124.34 32. Air India Ltd. 3348.71 2404.25 944.46 33. Indian Railway Finance Corporation Ltd. 770.32 45.04 725.28 34. Bharat Sanchar Nigam Ltd. 584.58 6.99 577.59

Table 12.6 Decrease in Foreign Exchange Utilisation (Rs. in crore)

Sl. No Name of the Enterprise 2004-05 2003-04 Decrease

1. Satluj Jal Vidyut Nigam Ltd. 75.40 162.77 87.37 2. GAIL (India ) Ltd. 956.98 1925.88 968.90 3. Hindustan Petroleum Corporation Ltd. 14031.71 18557.74 4526.03 4. Bharat Electronics Ltd. 1023.35 1098.75 75.40 5. Bharat Earth Movers Ltd. 496.82 574.41 77.59 6. Handicrafts & Handlooms Exports Corporation Ltd. 1232.42 1698.28 465.86 7. Shipping Corporation of India Ltd. 1546.16 2054.54 508.38 8. Engineers India Ltd. 161.45 231.40 69.95 9. Power Grid Corporation of India Ltd. 455.59 653.84 198.25

114 Public Enterprises Survey 2004-05 : Vol.-I 13 HUMAN RESOURCES DEVELOPMENT IN PUBLIC ENTERPRISES

Section - I Personnel Policy and Human Resources Development 13.1.1 The Human Resources Development training programmes in collaboration with assumes a special significance in the premier Management/Training Institutes in management of public sector enterprises the country as well as International agencies particularly for their efficient and profitable like the Commonwealth Secretariat. The functioning. PSEs employ a large number of details in this regard are as under: workforce in different disciplines and the (i) Executive Development successful operation of these enterprises to Programme (EDP) a large extent depends on the skills and capabilities of the workforce. Since there In order to upgrade the skills and have been widespread changes in the knowledge of middle and senior level financial and production management executives in PSEs, Department of Public methods, techniques and technologies, etc. Enterprises has been conducting EDPs for due to globalisation and liberalization, there duration of 2-5 days in collaboration with is a need to improve every sphere of public premier Management/Training Institutes. sector activity including quality of manpower. During 2004-05, 44 such programmes Human Resources Development is were conducted in collaboration with IIM considered to be one of the most important Lucknow, IIM Kozhikode, Institute of Public inputs for the public sector reforms. Enterprise, Hyderabad; National Institute of 13.1.2 Out of around 16.93 lakhs manpower Financial Management, Faridabad; Indian deployed presently in PSEs about 3.63 lakhs Institute of Public Administration, Delhi; are in the supervisory and managerial cadres Institute of Chartered Accountants of India; which represents about 21.44% of total International Management Institute, Delhi; manpower. To improve the quality of the Indian Society for Training and Development; manpower and to upgrade their knowledge Institute of Cost and Works Accountants of and skills various steps like organizing in- India; Institute of Company Secretaries of house training programmes have been taken India; V.V. Giri National Labour Institute, by the PSEs. Apart from this, the PSEs Noida; Management Development Institute, depute their executives for various training Gurgaon; Administrative Staff College of programmes being organized by the premier India, Hyderabad; National Productivity Management/Training Institutes in India and Council, New Delhi, etc. abroad. (ii) Overseas Training Programmes Human Resources Development The Department of Public Enterprises 13.1.3 The Department of Public Enterprises, co-ordinates training programmes abroad which is the nodal Department for PSEs, has being offered under various aided schemes. been supplementing the efforts of the public During 2004-05, 34 Public Sector executives enterprises in this regard by organizing have been sponsored for training

Human Resource Development in Public Enterprises 115 programmes under different aided schemes 13.1.4.2 As on 31.3.2005, there were 52 in countries like Singapore, Malaysia, Schedule ‘A’, 87 Schedule ‘B’, 55 Schedule Sweden, Thailand, New Zealand, Japan, UK ‘C’ and 07 Schedule ‘D’ enterprises. The and US. These programmes covered details of the Board level posts (whole time) subjects like e-commerce, e-business are given in the table below: strategies, budgeting & finance management, challenges of privatization, Schedule Chief Executive Whole Time promotion of small & medium enterprises, Directors public sector reforms, women in 2004 2005 2004 2005 management, corporate management, etc. Schedule A 51 52 — — Board Structure of PSEs Schedule B 87 87 185 194 13.1.4 The Department of Public Enterprises Schedule C 54 55 211 207 formulates policy guidelines on the Board Schedule D 09 07 67 68 structure of public enterprises and advises on the shape and size of organizational Total 201 201 463 469 structure of PSEs. The public enterprises are categorized in four Schedules namely ‘A’, ‘B’, Professionalisation of Boards ‘C’ and ‘D’ based on various quantitative, 13.1.5 In pursuance of the public sector qualitative and other factors. The quantitative policy being followed since 1991 several factors are: investment, capital employed, net measures have been taken by the sales, profit before tax, number of Department of Public Enterprises to employees, number of units and value added professionalize the Boards of public per employee. Qualitative factors are : enterprises. The guidelines issued in 1992 national importance, complexities of provide that outside professionals should be problems, level of technology, prospects for inducted on the Boards of PSEs in the form expansion and diversification of activities and of part-time non-official Directors and that the competition from other sectors, etc. while the number of such Directors should be at least other relates to the strategic importance of 1/3rd of the actual strength of the Board. The the corporation. The pay scales of Chief guidelines also provide that the number of Executives and full time Functional Directors Government Directors on the Boards should in PSEs are determined as per the schedule be not more than one-sixth of the actual of the concerned enterprise. strength of the Board subject to a maximum 13.1.4.1 Proposals received from the of two. Apart from this there should be some administrative Ministries/Departments for functional Directors on each Board whose categorization /upgradation of PSEs are number should not exceed 50% of the actual considered in DPE in consultation with PESB. strength of the Board In the case of listed During 2004-05, DPE examined 17 proposals PSEs headed by executive Chairman the relating to categorization of PSEs in number of non-official Directors (Independent appropriate schedule, creation of posts, etc. Directors) should be at least half of the As a result, 3 PSEs were categorized in strength of the Board. appropriate schedule, 2 PSEs were upgraded to the next higher schedule and 6 13.1.5.1 Appointments of part-time non- posts of Functional Directors created. official Directors on the Boards of PSEs are

116 Public Enterprises Survey 2004-05 : Vol.-I made by the administrative Ministries/ 4 non-official Directors in the case of Departments from the panel prepared in Navratna and 3 non-official Directors in the consultation with the Department of Public case of Miniratnas before the Boards Enterprises. In so far as Navratna/Miniratna exercise the enhanced powers. During 2004- PSEs are concerned, the panel of non-official 05 the Search Committee held 5 meetings Directors is prepared by the Search and selected 65 persons for appointment as Committee consisting of Chairman (PESB), non-official Directors in 7 Navratna and 12 Secretary (DPE), Secretary of the Miniratna PSEs. In the case of PSEs other than administrative Ministry/Department of the Navratna and Miniratna, 27 proposals were PSE, and four other non-official Members. examined/considered and 21 persons were According to the Navratna/Miniratna scheme, recommended for appointment as non-official the Boards of these companies should be part-time Directors on the Boards of various professionalised by inducting a minimum of PSEs.

Human Resource Development in Public Enterprises 117 Section-II

Wage & Salary Policies

13.2 The Department of Public Procedure adopted for revision of pay in Enterprises, Ministry of Heavy Industries & IDA pattern of scales w.e.f. 1.1.1997 Public Enterprises inter alia function as a (i) CPSEs which have been consistently nodal agency for evolution of policy relating making profit are allowed to adopt to wage settlements of unionized employees/ revised scales of pay in the IDA pattern pay revision of non-unionized supervisors in accordance with DPE’s guidelines. and executives holding posts below the (ii) CPSEs which had incurred loss during Board level as well as at the Board level. The any of the three financial years Department provides clarifications and preceding to pay revision would also render advice to the administrative Ministries/ be allowed to revise the scales with the Departments and the CPSEs in matters approval of the Government i.e. the relating to the wage policy and revision in administrative Ministry acting in the scales of pay of the executives. The consultation with DPE, provided they CPSEs are following Industrial Dearness give an estimate as to how the Allowance (IDA) pattern scales of pay and resources would be generated by them Central Dearness Allowance (CDA) pattern to meet the extra expenditure. scales of pay. (iii) In respect of sick enterprises referred Industrial Dearness Allowance (IDA) to BIFR, revision of pay scales for all pattern and related Scales of Pay in CPSEs employees following IDA pattern would be strictly in accordance with the 13.2.1 Government policy relating to pay rehabilitation packages approved or to scales and pay pattern is that all employees be approved by the BIFR and after of the CPSEs should be on IDA pattern and providing for the additional expenditure related scales of pay. Instructions had been on account of pay revision in this issued by the DPE in July, 1981 and July, package 1984 to all the administrative Ministries that as and when a new CPSE is created or (iv) CPSEs under construction or new established, IDA pattern and related scales CPSEs would submit their proposals for of pay should be adopted ab-initio. There are adoption of revised scales of pay to 237 CPSEs (excluding Banks, Insurance their administrative Ministries for Companies and Financial Institutions) under approval in consultation with the DPE. the administrative control of the Central Landmark Judgement of Supreme Court Government. They employ approximately on pay revision. 16.93 lakhs workers, clerical staff and 13.2.2 The Supreme Court in Transfer executives. Out of this 86.86 % of the workers petition No. 8 of 2000 in A.K. Bindal and other and executives are on IDA pattern and vs Union of India has passed the landmark related scales of pay. Judgement on 25.4.2003 in case of pay

118 Public Enterprises Survey 2004-05 : Vol.-I revision of sick PSEs referred to BIFR. The also been extended to the employees of A.K. Bindal case was dealing with the claim CPSEs following CDA pattern of scales. The of employees of Fertilizer Corporation of India employees of CPSEs following CDA pattern and Hindustan Fertilizers Corporation Ltd. for has also been allowed the benefit of merger revision of IDA pay scale of 1992. Both these of 50% of DA with basic pay w.e.f 1.4.2004. were sick PSEs referred to BIFR. The This benefit has been allowed to the petitions prayed for quashing the condition employees of those CPSEs that are not loss linking revision of pay scales of employees making and are in a position to absorb the of sick enterprises to the revival packages additional expenditure on account of merger being formulated by BIFR. of DA with basic pay from their own resources 13.2.2.1 The Supreme Court, however, held without any budgetary support from the Govt. that economic viability or financial capacity WAGE POLICY of the employer Company should be taken (i) Pay Revision for Workmen into consideration in the matter of revision of the pay scales of the employees. 13.2.4 In respect of workmen following IDA CDA Pattern in CPSEs pattern scales of pay, autonomy has been allowed to the managements of CPSEs to 13.2.3 CDA pattern pay scales are applicable negotiate revision of pay scales for the to some of the clerical staff, unionized cadres workmen within certain stipulated conditions. and executives of the 69 CPSEs who were The latest wage negotiation to be entered on the rolls of these companies as on between managements and the workers’ 1.1.1986 and upto 31.12.1988 and were in unions, was to come to effect from 1.1.1997 receipt of CDA pattern pay scales during that for 10 year periodicity and 1.1.2002 for five time. A High Power Pay Committee (HPPC) year periodicity. The Government orders was appointed by the Government in were issued on 14.1.1999, 26.7.2000 and pursuance of the Supreme Court directions 11.2.2004 to this effect as under: dated 12.3.1986 which submitted its Report to the Government on 24.11.1988. Its 13.2.4.1 For the unionized employees recommendations have been implemented covered by the IDA pattern pay scales in the in these CPSEs. In pursuance of the Central Public Enterprises, the Government Supreme Court direction dated 3.5.1990 read have decided to allow the option to opt for with the subsequent directions dated either: - 28.8.1991, IDA pattern and related scales of i. A ten year periodicity of pay revision pay have been introduced in these CPSEs with 100% neutralization of DA as set with effect from 1.1.1989. All appointments out in the guidelines issued on 14.1.99 made in CPSEs on or after 1.1.1989 are on OR IDA pay structure only. Out of 69 CPSEs (covered under HPPC), at present there are ii. A five year periodicity on the basis of only 61 CPSEs, which are following both graded neutralization as did exist CDA and IDA pattern scales of pay. previously i.e. from 1.1.1992 to Approximately 4% of the total workforce in 31.12.1996 all CPSEs taken together is presently under 13.2.4.2 The CPSEs who had opted earlier CDA pattern of scales. The recommendation for five year wage negotiation for workmen of 5th Pay Commission w.e.f. 1.1.1996 has have been allowed wage negotiation for a

Human Resource Development in Public Enterprises 119 period of five years with effect from 1.1.2002. one of the measures adopted. Restructuring Some of the CPSEs have already of manpower may lead to redundancy. In this implemented this negotiated wage context, it has been the constant endeavour settlements. of the Government to safeguard the interest The pay scales in respect of workmen of the employees in CPSEs. following CDA pattern scales of pay are 13.2.6.1 In the process, the Voluntary revised as per the recommendations of the Retirement Scheme, which was initially Central Pay Commission and Government announced in October, 1988 for the first time decision thereon for the Central Government was further liberalized and a comprehensive employees. package was notified vide DPE’s O.M dated (ii) Pay Revision for Executives 5th May, 2000 so as to cater to the need of the CPSEs to meet their objectives and also 13.2.5 The last pay revision for the IDA to protect the interest of the workers affected executives and non-unionized supervisors due to various forms of restructuring. was done w.e.f 1.1.97 for a period of ten years based on the recommendations of 13.2.6.2 Difficulties were being faced by the Justice Mohan Committee and consequent enterprises where the wage revision effective DPE O.M dated 25.6.99. For the employees from 1st January, 1992 or 1997, as the case following CDA pattern pay, their pay scales may be, could not be effected. This lead to are governed by the recommendations of the hardships to the employees involved in these Central Pay Commission and Government enterprises. The Voluntary Retirement decisions thereon for the Government Scheme was further modified by issuance of employees. The benefits allowed to subsequent notification of 6th November, Government employees are also extended 2001, which inter alia provides for 100% to them as per the Supreme Court directions. additional compensation for the employees where wage revision of 1992 could not be 13.2.5.1 As per the recommendations of effected and similarly 50% additional the High Power Pay Committee and Supreme compensation for employees where the wage Court directive thereon, the employees revision of 1997 could not be made effective. following CDA pattern of scales of the Central These increases in VR compensation are to Public Sector Enterprises would get pay be computed based on the existing pay of revision only as and when similar changes the employees. The VRS/VSS ex-gratia in are effected for the Central Government respect of CDA pattern employees at 1986 employees. scales of pay has been enhanced by 50% VOLUNTARY RETIREMENT SCHEME vide DPE’s OM dated 26.10.2004. These (VRS) liberalizations in the compensation package would help the sick and loss making 13.2.6 In the present market scenario, in enterprises in downsizing their manpower. view of the ongoing restructuring in the industries including CPSEs, several 13.2.6.3 Beginning from the introduction of measures for reforms and restructuring of the Voluntary Retirement Scheme in October CPSEs have been taken up by Government. 1988 till March, 2005, aout 5.33 lakhs Right sizing of manpower in the CPSEs is 2employees have been released under VRS.

120 Public Enterprises Survey 2004-05 : Vol.-I VRS IN CPSEs THAT CAN SUSTAIN A VRS (ii) 25 days salary per year of service for ON THEIR OWN SURPLUS RESOURCES the balance of service left until 13.2.7 Financially sound enterprises who superannuation subject to some have to reduce their workforce in order to conditions. remain competitive may frame their own 13.2.8.1 The model, known as DHI schemes of VRS and make it attractive (Department of Heavy Industry) model, enough for employees to opt for it. They may available to employees of sick and unviable offer as compensation upto 60 days salary PSEs is to allow ex-gratia payment equivalent for every completed year of service. However, to 45 days salary for each completed year of such compensation will not exceed the salary service or the salary for the remaining months for the balance period of service left. of service left, whichever is less. However, VRS IN MARGINALLY PROFIT OR LOSS all those who have completed not less than MAKING AND SICK AND UNVIABLE PSEs 30 years of service, are eligible for a maximum of 60 (sixty) months salary as 13.2.8 Marginally profit making or loss compensation subject to the amount not making PSEs have been permitted to exceeding the salary for the balance period introduce an improved VRS based on Gujarat of service left. model. Under this model an employee will receive compensation as follows : 13.2.8.2 The VRS optees in PSEs which are marginally profit/loss making or sick/ (i) 35 days salary for each completed year unviable can opt for either of the Gujarat of service; and model or DHI model.

Human Resource Development in Public Enterprises 121 Section-III Scheme for Counselling, Retraining and Redeployment

13.3.1 Restructuring of enterprises is a - to equip them for new avocations, global phenomenon, particularly in the - to engage them in income generating context of liberalized economy. There has self-employment. been thrust on restructuring the Central - to help them rejoin the productive Public Sector Enterprises (CPSEs) both at process. macro as well as micro level. In the process, rationlization of manpower has also become 13.3.4 The main elements of the CRR a necessity. But this affects in some cases programme are Counselling, Retraining and the interest of the workers. As such, the Redeployment. Besides, a new element of policy of the Government has been to sensitization programme has also been implement reforms with a humane face and included under the CRR programme. provide adequate safety net for the affected 13.3.5 Counselling helps the rationalized workers. employees to absorb the trauma of leaving 13.3.2. Considering the emerging need to the organization, to properly manage their have safety net, Government had established funds including compensation and to National Renewal Fund (NRF) in February, motivate them to face the challenges and to 1992 broadly to cover the expenses of VRS re-join the productive process. Similarly, and to provide retraining to the workers in retraining strengthens their skill/expertise. the organized sector. However, in the Selected training institutes impart need- backdrop of on going restructuring exercises based training of 20 days / 30 days / 40 days in the central enterprises, focus was given modules. The faculty support is both internal on the need of CPSEs. The NRF was and external, and the approach is to provide abolished in February, 2000. The retraining classroom lectures as well as field activity was administered by Department of experience. In the process, trainees interact Industrial Policy & Promotion till 31st March, with experts from various fields and are being 2001. The scheme for Counselling, helped in preparation/finalization of project Retraining and Redeployment (CRR) of reports. The retraining should lead to rationalized employees of CPSEs has been redeployment mostly through self- under the charge of Department of Public employment. In the present scheme, the Enterprises since 2001-02. objective is to maximize the rate of self- employment. The Nodal Agencies, therefore, 13.3.3 The scheme for Counselling, provide need-based support, linkage with Retraining and Redeployment (CRR) inter- credit institutions and continuously follow up alia aims at: with the retrained personnel. - to provide opportunity for self- 13.3.6 The 3 days’ sensitization programme employment. in the premises of the CPSEs aims at - to reorient rationalized employees providing capsule course, literature for through short duration programmes. guidance, motivation cum awareness, information on market opportunities etc. prior

122 Public Enterprises Survey 2004-05 : Vol.-I to the release of the employees so that they 13.3.10 A Plan Fund of Rs. 8 crore was can leave the organization with confidence allocated initially during 2001-02, which was to meet the challenges of their early enhanced to Rs.10 crore during 2002-03 and retirement. 2003-04. The plan fund was substantially 13.3.7 For monitoring the CRR programme increased to Rs. 30 crore during 2004-05. the in-built mechanism involves field visits For imparting training to the rationalized and inspections by the concerned officers of employees, 35 selected nodal agencies are DPE. Coordination Committees at local level have also been formed. The Scheme also operational with around 103 Employees provides for inter-ministerial Review Assistance Centres (EACs). During the year Committee under Secretary (PE) with 2001-02, 2002-03, 2003-04 and 2004-05, the members from selected concerned number of persons retrained was 8064, Government Departments/Agencies/CPSEs. 12066, 12134 and 28003 respectively. The 13.3.8 The Nodal Training Agencies are average rate of redeployment is around 45%. required to counsel VRS optees, impart A list of nodal agencies is given at Annexure. training and reorientation, develop curriculum/materials, prepare feasibility 13.3.11 In order to evaluate the report market surveys, post training follow up, implementation of CRR Scheme, an efficacy interface with credit institutions, support in study was conducted by V. V. Giri National self employment, regular liaison with CPSEs, Labour Institute, an autonomous body under convening meeting of Co-ordination Ministry of Labour. The study covers valuable Committee etc. suggestions/findings on numerous areas. 13.3.9 CPSEs are the key to the success Bringing improvement in the CRR Scheme of the scheme. They are supposed to extend on continuous basis has been primary motto all possible support for the welfare of the of this Department. In view of countrywide separated employees by clearing their compensation/dues before release. Long network of the CRR Scheme, a web-based association with employees puts CPSEs in a system to benefit all the stakeholders is being better position to identify their retraining needs. developed.

LIST OF SELECTED NODAL TRAINING AGENCIES

1. Associated Chamber of Commerce & 6. Centre for Dvelopment of Advanced Industry of India (ASSOCHAM), New Computing, Mohali (Chandigarh) Delhi 7. CMC 2. Central Institute of Plastic Engg. and 8. Centre for Management Development Technology (CIPET), Channai Trivendrum 9. Director Genral of Employment & 3. CIPET, Bhubaneshwar Training, M/o Labour 4. CIPET, Hajipur 10. Electronics Service & Training Centre, Kaniya, Ramnagar 5. Central Leather Research Insititue, 11. Indian Council of Small Industries, Chennai Kolkata

Human Resource Development in Public Enterprises 123 12. Indian Institute of Entrepreneurship, 25. Small Industries Service Institute, Guwahati Coimbatore

13. Institute of Entrepreneurship 26. Small Industries Service Institute, Development, Patna Indore

14. Institute of Labour Development, 27. Small Industries Service Institute, Jaipur Kanpur

15. Kalinga Institute of Industrial 28. Small Industries Service Institute, Technology (KIIT), Bhubaneswar Karnal

16. Madhya Pradesh Consultancy 29. Small Industries Service Institute, Organisation, Bhopal Koklata

17. MITCON, Pune 30. Small Industries Service Institute, 18. National Institute of Small Industry Mumbai Extension Training (NISIET), 31. Small Industries Service Institute, New Hyderabad Delhi

19. National Productivity Council, New 32. Small Industries Service Institute, Delhi Patna

20. National Small Industries Corpn. Ltd., 33. Small Industries Service Institute, New Delhi Raipur

21. NIESBUD, NOIDA 34. Small Industries Service Institute, 22. NITRA, Ghaziabad Thrissur

23. Small Industries Service Institute, 35. U.P. Industrial Consultants Ltd., Kanpur

24. Small Industries Service Institute, Chennai

124 Public Enterprises Survey 2004-05 : Vol.-I Section - IV EMPLOYMENT UNDER RESERVED CATEGORIES

The Personnel and Recruitment Second Backward Classes Commission Policies of the Public Enterprises are (Mandal Commission) and in accordance with formulated by the management of the Supreme Court Judgement in the Indira respective Public Sector Enterprises. Sawhney case, instructions were issued However, on the matters of general providing reservation of 27% of vacancies in importance, policy guidelines are issued by favour of Other Backward Classes (OBCs) the Government to the enterprises which are in Civil Posts and Services under the to be kept in view by the latter while framing Government of India. Department of their individual corporate policies. Personnel & Training (DOPT) who formulate the policy in respect of reservation in 2. Apart from having formal Presidential services, have been issuing instructions from Directives issued to Public Sector Enterprises time to time on various aspects of reservation by the concerned administrative Ministries so in favour of OBCs. Reservation for OBCs was as to ensure reservation in regard to made effective w.e.f. 8.9.1993. Department employment for Scheduled Castes, of Public Enterprises (DPE) have been Scheduled Tribes and Other Backward extending these instructions to the Public Classes (OBCs), on the same lines as Sector Enterprises through their applicable to the Central Government administrative Ministries for compliance. A Ministries/Departments, the Department of comprehensive Presidential Directive Public Enterprises also keep a watch on the incorporating all instructions was prepared reservation policies in the recruitment by by the Department of Public Enterprises and calling for Annual Reports from the PSEs and issued to all administrative Ministries vide also by taking necessary follow-up action DPE’s OM dated 27th July, 1995 for formal after scrutinizing these reports. However, in issuance to the PSEs under their control, the case of details of implementation, the under the relevant Article of the Articles of Public Enterprises generally follow the Association/Section of the relevant Act. instructions from Department of Personnel 4. Although the administrative & Training. A comprehensive Presidential Ministries/Departments concerned have Directive incorporating all important been made formally responsible for instructions on reservation for SCs and STs, implementation of these Directives, the was issued on 25th April, 1991 to all Department of Public Enterprises also take administrative Ministries/Departments follow-up action on the recommendations concerned for formal issuance to the Public made by the Parliamentary Committee on Enterprises. Subsequently, changes and Welfare of Scheduled Castes and Scheduled modifications are circulated to PSEs through Tribes and National Commission for SCs/STs/ their administrative Ministries/ Departments OBCs. The PSEs have been advised by this for information and compliance. Department to make vigorous efforts to wipe out the backlog vacancies so as to improve 3. Based on the recommendation of the the representation of Scheduled Castes/

Human Resource Development in Public Enterprises 125 Scheduled Tribes/OBCs in the services, candidates belonging to Scheduled Castes, particularly in Group ‘A’ & ‘B’ posts. Public Scheduled Tribes and OBCs where Enterprises have also been advised to recruitment is on All-India basis through open invariably associate an officer of appropriate competition as well as other categories of level belonging to SC/ST with their persons entitled to reservation of vacancies Departmental Promotion Committee/ is indicated below: Selection Board. 5. The present quota for reservation for

Catagory Group ‘A’&’B’ Group ‘C’ Group ‘D’ Scheduled Castes 15% 15% 15% Scheduled Tribes 7.5% 7.5% 7.5% Other Backward Classes 27% 27% 27% Physically Handicapped Persons 3% 3% 3% Ex-servicemen & Dependents of those killed in action – 14.5% 24.5%

6. The following Tables sum up the earliest data available) and the comparative position regarding representation of position as on the first day of the year 1980, Scheduled Castes and Scheduled Tribes in 2004 and 2005. Public Sector Enterprises as on 1.1.1971 (the

Group Total No. of Representation of SCs/STs employees SCs No. %age STs No. %age

As on 1.1.1971 (Based on information furnished by 85 enterprises) Group ‘A’ 31,311 163 0.52 53 0.17 Group ‘B’ 35,751 549 1.54 57 0.16 Group ‘C’ 3,51,347 19,302 5.59 4,519 1.29 Group ‘D’ 1,29,220 20,626 15.96 7,680 5.94 (Excluding Safai Karamcharis)

Total 5,47,629 40,640 7.42 12,309 2.25

Group ‘D’ 5,551 4,547 81.75 77 1.39 (Safai Karamcharis) Grand Total 5,53,180 45,187 8.17 12,386 2.24

126 Public Enterprises Survey 2004-05 : Vol.-I Group Total No. of Representation of SCs/STs employees SCs No. %age STs No. %age As on 1.1.1980 (Based on information furnished by about 177 enterprises) Group ‘A’ 93,984 2,726 2.90 623 0.66 Group ‘B’ 97,756 5,003 5.12 1,329 1.36 Group ‘C’ 12,74,581 2,30,505 18.08 98,329 7.71 Group ‘D’ 3,53,981 79,167 22.36 38,083 10.76 (Excluding Safai Karamcharis) Total 18,20,302 3,17,401 17.44 1,38,364 7.60 Group ‘D’ 36,030 23,309 64.69 1,492 4.14 (Safai Karamcharis) Grand Total 18,56,332 3,40,710 18.35 1,39,856 7.53

Group Total No. of Representation of SCs/STs employees SCs No. %age STs No. %age OBCs No. %age As on 1.1.2004 (Based on information furnished by about 189 enterprises) Group ‘A’ 1,65,320 20,006 12.10 6,032 3.65 8,978 5.43 Group ‘B’ 1,56,822 19,802 12.63 8,980 5.73 12,166 7.76 Group ‘C’ 7,14,125 1,41,357 19.79 67,396 9.44 1,13,992 15.96 Group ‘D’ (excluding Safai 2,58,663 55,453 21.44 32,073 12.40 46,023 17.79 Karamcharis) Total 12,94,930 2,36,618 18.27 1,14,481 8.84 1,81,159 13.99 Group ‘D’ 17,778 13,111 73.75 568 3.19 838 4.71 (Safai Karamcharis) Grand Total 13,12,708 2,49,729 19.02 1,15,049 8.76 1,81,997 13.86

Group Total No. of Representation of SCs/STs employees SCs No. %age STs No. %age OBCs No. %age As on 1.1.2005 (Based on information furnished by about 211 enterprises) Group ‘A’ 1,65,405 208,64 12.61 6,607 3.99 10,410 6.29 Group ‘B’ 1,54,174 20,335 13.18 9,444 6.12 13,001 8.43 Group ‘C’ 6,64,501 1,31,204 19.74 64,957 9.77 1,13,407 17.06 Group ‘D’ (excluding Safai 2,42,973 53,027 21.82 34,594 14.23 54,845 22.57 Karamcharis) Total 12,27, 053 2,25,430 18.37 1,15,602 9.42 1,91,663 15.61 Group ‘D’ 15,543 12,072 77.66 469 3.01 557 3.58 (Safai Karamcharis) Grand Total 12,42,596 2,37,502 19.11 1,16,071 9.34 1,92,220 15.46

Human Resource Development in Public Enterprises 127 7. It may, however, be noted from the to take effective steps to fill up the unfilled above Tables that as on 1.1.2005 there has reserved posts in Direct Recruitment as well been improvement in the representation of as in promotion in accordance with the both Scheduled Castes and Scheduled existing instructions. One of the agenda Tribes in Group ‘A’ and Group ‘B’ posts over enunciated in National Common Minimum the years. The representation of SCs/STs in Programme (NCMP) is to launch a Special Group ‘A’ posts has been rising steadily and Recruitment Drive to fill up backlog of has increased from 2.90% and 0.66% as on reserved vacancies for SC and ST in CPSEs. 1.1.1980 to 12.61% and 3.99% respectively DPE has issued instructions to all as on 1.1.2005. Similarly, in regard to Group administrative Ministries/ Departments ‘B’ posts the representation of SCs/STs has dealing with CPSEs to fill up these vacancies risen from 5.12% and 1.36% as on 1.1.1980 by December, 2005. to 13.18% and 6.12% respectively as on 9. Department of Public Enterprises 1.1.2005. Though the overall percentage of have extended the scheme for reservation representation of SC/ST in services is for Ex-servicemen to the Public Enterprises adequate, the representation in Group ‘A’ and through the administrative Ministries/ Group ‘B’ is not yet satisfactory. This is for Departments, and instructions streamlining the reasons that the private sector companies the procedure for recruitment of Ex- taken over by the Government, which servicemen have been issued so as to account for a significant percentage of total augment the in-take in the services of public employment in the public sector at present, enterprises. Such PSEs, which are in a did not necessarily have any scheme of position to offer agencies/dealerships have reservation for Scheduled Castes/Scheduled been advised to reserve quota of such Tribes till these were nationalized. The agencies/dealership for allotment to Ex- shortfall in the representation of Scheduled servicemen. Castes/Schedule Tribes in Group ‘A’ and Group ‘B’ posts in Public Enterprises is also 10. DPE have also issued draft on account of non-availability of suitable Presidential Directive to all the administrative Scheduled Castes and Scheduled Tribes Ministries/Departments concerned with the candidates in technical disciplines. Most of PSEs for employment of physically the Public Enterprises being in the handicapped persons in PSEs on 22.4.1991 manufacturing/production sector, have incorporating all instructions issued on the preponderance of technical posts in Group subject. With the enactment of the Persons ‘A’ and ‘B’ services. The representation of with Disabilities (Equal Opportunities, OBCs in Group ‘A’ and ‘B’ posts as on Protection of Rights and Full Participation) 1.1.2005 is 6.29% and 8.43% respectively. Act, 1995, the reservation to physically Though the representation of OBCs in all handicapped persons stood extended to Groups ‘A’, ’B’, ‘C’ and ‘D’ posts has identified Group ‘A’ and ‘B’ posts filled improved, the overall percentage of OBCs through Direct Recruitment. As per the Act, in services is not satisfactory. not less than 3% shall be reserved for 8. The need to ensure timely filling up Persons with Disabilities of which 1% each of reserved posts and the backlog has been shall be reserved for persons suffering from stressed in various instructions issued from (i) blindness or low vision (ii) hearing time to time. All administrative Ministries/ impairment and (iii) locomotor disability or Departments have been requested to advise cerebral palsy. All PSEs have been advised the PSEs under their administrative control to comply with the provisions of the Act.

128 Public Enterprises Survey 2004-05 : Vol.-I Table 13.1 Statement Showing Total Employees, Salaries, Wages and Other Benefits Received by the Employees of Public Sector Undertaking (Rs. in crore)

Sl. No. Enterprise Group Number of Employees Salaries and Wages and Other Benefits Including Bonus

2004-05 2003-04 2004-05 2003-04

1 Enterprises under construction 2804 2735 0.00 0.00

2 Steel 163292 169261 5137.70 5672.35

3 Minerals and Metals 36139 36660 935.35 862.71

4 Coal and Lignite 483394 499872 11507.25 9557.06

5 Power 54406 54349 1428.64 1349.37

6 Petroleum 110929 114266 5670.79 1349.37

7 Fertilizers 16156 18173 496.45 543.43

8 Chemicals and Pharmaceuticals 8201 9845 198.53 239.92

9 Heavy Engineering 51903 53631 1787.81 1774.82

10 Medium and Light Engineering 71892 73819 1588.00 1588.65

11 Transportation Equipment 66170 68397 1750.95 1704.85

12 Consumer Goods 10520 10899 230.71 241.51

13 Agro-Based Industries 4650 5533 67.53 66.93

14 Textiles 53641 67096 477.19 665.66

15 Trading and Marketing Services 57671 68645 1933.80 1670.92

16 Transportation services 58571 58566 3664.95 3471.49

17 Contract and Construction services 15966 17179 306.13 306.95

18 Industrial Dev. and Tech. Consultancy Services 20392 19934 821.38 823.98

19 Tourist Services 6983 6507 119.61 111.31

20 Financial Services 3053 3082 138.30 133.22

21 Telecommunications and Information Technology Services 394431 401731 10260.37 7996.97

22 Section 25 Companies 2114 2120 56.66 52.54

Grand Total 1693278 1762300 48578.10 43789.78

Human Resource Development in Public Enterprises 129 Table 13.2 Statement Showing Employment, Gross Block, Cost of Production and Labour Content in Some of The Commodity Groups during 2004-05 (Rs. in crore) Sl. Commodity Group No. of Gross Gross Cost of Labour Labour No. Employees Block Block Production Content Content (Rs. in (Per- (Rs. in (Rs. in as % of Crore Employee Crores) Crore) Cost of (Rs. in Production Thousand) 1. Enterprises Under Construction 2804 559.40 1995.01 0.00 0.00 ********** 2. Steel 163292 38034.91 2329.26 28406.78 5137.70 18.09 3. Minerals and Metals 36139 12918.56 3574.69 5688.71 935.35 16.44 4. Coal and Lignite 483394 37109.21 767.68 25798.53 11507.25 44.60 5. Power 54406 79079.30 14535.03 24788.06 1428.64 5.76 6. Petroleum 110929 196147.57 17682.26 360593.36 5670.79 1.57 7. Fertilizers 16156 9680.97 5992.18 10889.02 496.45 4.56 8. Chemicals and Pharmaceutical 8201 1298.54 1583.39 1487.56 198.53 13.35 9. Heavy Engineering 51903 4241.31 817.16 10240.80 1787.81 17.46 10. Medium and Light Engineering 71892 4716.94 656.11 9133.24 1588.00 17.39 11. Trasportation Equipment 66170 4355.84 658.28 7974.75 1750.95 21.96 12. Consumer Goods 10520 3005.20 2856.65 2046.65 230.71 11.27 13. Agro - Based Industries 4650 86.93 186.95 179.22 67.53 37.68 14. Textiles 53641 693.73 129.33 2963.50 477.19 16.10 15. Trading and Marketing Services 57671 2357.56 408.79 87560.23 1933.80 2.21 16. Transportaion Services 58571 27821.47 4750.04 20467.90 3664.95 17.91 17. Contract and Construction Services 15966 4275.04 2677.59 3715.50 306.13 8.24 18. Industrial Dev. And Tech. Consutancy Sercices 20392 22592.76 11079.23 4809.94 821.38 17.08 19. Tourist Services 6983 214.57 307.27 519.00 119.61 23.05 20. Financial Servies 3053 623.10 2040.94 7147.62 138.30 1.93 21. Telecommunications and Information Technology Services 394431 119204.84 3022.20 34322.94 10260.37 29.89 22. Section 25 Compaines 2114 139.86 661.59 164.54 56.66 34.44 Grand Total : 1693278 569157.61 3361.28 648897.85 48578.10

130 Public Enterprises Survey 2004-05 : Vol.-I Table 13.3 Per Capita Emoluments of Public Sector Emplyoees in Retation to increase in Average All-India Consumer Price Index (1960=100)

Sl. Employ. (in lakhs) Emoluments Per Capita %age increase Average Percentage No. (excl. Casual (Rs. in crore) Emoluments over 1971-72 index over increase & daily rated (Rupees) per capita 1971-72 workers) in average index

1971-72 7.01 415 5920 - 192 - 1972-73 9.32 541 5805 1.94 207 7.81 1973-74 13.44 749 5573 5.86 250 30.21 1974-75 14.32 1060 7402 25.03 317 65.10 1975-76 15.04 1352 8983 51.74 313 63.02 1976-77 15.75 1408 8940 51.01 301 56.77 1977-78 16.38 1646 10048 69.73 324 68.75 1978-79 17.03 1908 11210 89.36 331 72.40 1979-80 17.75 2213 12468 110.61 360 87.50 1980-81 18.39 2619 14239 140.52 401 108.85 1981-82 19.39 3133 16158 172.94 451 134.90 1982-83 20.24 3649 18029 204.54 486 153.13 1983-84 20.72 4485 21549 264.00 547 184.92 1984-85 21.07 5126 24328 310.95 582 203.13 1985-86 21.54 5576 25887 337.28 620 222.92 1986-87 22.11 6371 28820 386.82 674 251.04 1987-88 22.14 7193 32537 449.61 736 283.23 1988-89 22.09 8683 39415 565.79 803 318.23 1989-90 22.36 9742 43665 637.58 855 345.31 1990-91 22.19 10912 49179 730.73 951 395.31 1991-92 21.79 12311 56508 854.52 1079 461.98 1992-93 21.52 13983 64983 997.69 1185 517.1 1993-94 20.70 14913 72043 1116.94 1272 562.50 1994-95 20.62 17015 82517 1293.87 1402 630.21 1995-96 20.52 21931 106876 1705.34 1542 703.13 1996-97 20.08 22219 110662 1769.29 1687 778.65 1997-98 19.59 25385 129582 2088.89 1803 839.06 1998-99 19.00 26254 138179 2234.10 2039 961.98 1999-00 18.06 30402 168339 2743.56 2109 998.44 2000-01 17.40 38223 219672 3610.67 2190 1440.62 2001-02 19.92 38556 193554 3169.49 2284 1089.58 2002-03 18.66 42169 225986 3717.33 2375 1136.98 2003-04 17.62 43919 248481 41097.31 2467 1184.89 2004-05 16.93 48578 286888 4746.08 2561 1236.98

Human Resource Development in Public Enterprises 131 Table 13.4 Cognate Group-wise Women Employment during 2004-05

Sl. Commodity Group Managerial and Non-Executive Total No. Suppervisory

1 Enterprises Under Construction 4 14 18 2 Steel 1285 8476 9761 3 Minerals And Metals 299 1902 2201 4 Coal And Lignite 2204 28988 31192 5 Power 1338 2296 3634 6 Petroleum 3631 3418 7049 7 Fertilizers 321 623 944 8 Chemicals And Pharmaceuticals 114 530 644 9 Heavy Engineering 1092 1431 2523 10 Medium And Light Engineering 1827 10268 12095 11 Transportation Equipment 649 1903 2552 12 Consumer Goods 180 726 906 13 Agro-Based Industries 13 217 230 14 Textiles 119 1431 1550 15 Trading And Marketing Services 330 1448 1778 16 Transportation Services 4072 6163 10235 17 Contract And Construction Services 266 458 724 18 Industrial Dev. And Tech. Consultancy Services 816 647 1463 19 Tourist Services 151 433 584 20 Financial Services 370 340 710 21 Telecommunications And Information Technology Services 543 10775 11318 22 Section 25 Companies 110 204 314

Grand Total 19734 82691 102425

132 Public Enterprises Survey 2004-05 : Vol.-I 14 MOU SYSTEM IN CENTRAL PUBLIC SECTOR ENTERPRISES

BACKGROUND number of these forms and returns increased 14.1 The investment decisions to create manifold and ultimately the line ministry ends public sector units were based on social cost up controlling more and more of day-to-day benefit analysis. A number of public sector functions of the enterprises. The manager, enterprises came to be set up because the hence, finds that most of the decisions for social internal rate of return and social cost running the enterprises are taken by other benefit ratio were positive, even when their people and therefore, he sees no reason why private profitability was negative. Moreover he should be held accountable for results. most of the public sector enterprises were not 14.3 With the above background, the expected to maximize profits. These Government policy towards PSEs has been investment decisions by themselves do not reviewed from time to time and in 1984, the create any problem for evaluation of Government appointed Arjun Sengupta performance. However, the instrument (i.e. Committee to review the policy in respect of the accounting system) that was chosen to Public Sector Enterprises. Following the evaluate the performance was borrowed from recommendations of the committee report, the private sector, and this accounting system the Government of India introduced the judges performance on a single criteria, which concept of the Memorandum of is, profit. The public sector enterprises Understanding in 1988 to improve the performance, therefore, came to be evaluated performance of the PSEs and to introduce an based on their financial profit. There was objective system of evaluation of the clearly a lack of an instrument that could performance of the managements of the measure the performance of PSEs taking into PSEs. account the complexity of fusing social and THE CONCEPT OF MOU financial objectives and translating them into 14.4 The concept of Memorandum of measurable parameters. Understanding is very simple. It is supposed 14.2 Though the importance of the need for to be a freely negotiated document between both autonomy as well as accountability was the Government, acting as the owner of Public well understood, putting it into practice proved Sector Enterprise (PSE) and a specific PSE. to be difficult. For ensuring autonomy as well Second, it is supposed to clearly specify the as accountability, greater reliance was placed intentions, obligations and mutual on setting out rules and procedures, through responsibilities of both parties to the government directives, circulars, Memorandum of Understanding (MOU). If memorandum etc. These directives would be either of the above two conditions is violated, followed up by prescribing elaborate forms the effectiveness of the MOU as an instrument and returns that the enterprises must submit of performance improvement is bound to be periodically to the line ministry so that the line affected. Further, MOU makes an attempt to ministry could monitor compliance of these move the management of PSEs from directives. With the passage of time the management by controls and procedures to

MOU System in Central Public Sector Enterprises 133 management by results and objectives. STEP 1 - CRITERIA SELECTION Another way of saying the same thing is that 14.6.1.1 In the first step, one has to choose MOU makes an attempt to move the an appropriate set of criteria to be included in management of PSEs from reliance on ex- the MOU. This raises the question: what ante controls to a system of ex-post controls. constitutes an appropriate set of criteria? THE OBJECTIVES OF MOU SYSTEM According to the MOU philosophy only those criteria. should be included in the MOU which 14.5 The objectives of the MOU system are are “fair” to the manager, as well as “fair” to to: the country and have been negotiated freely. · Measure the performance of PSEs taking Fairness to managers implies that the criteria into account the complexity of fusing included in the MOU should measure only social and financial objectives and those aspects of managerial performance translating them into measurable which are under manager’s control. parameters; Performance criteria must be selected · Ensure simultaneous increase in carefully and not arbitrarily. These should be autonomy as well as accountability; based on the enterprises’ corporate plan that · Set up new institutions and administrative looks at three to five years in the future. They & personnel systems; must also be consistent with plan and · Replace ‘multiple principles with multiple budgetary goals of the government. objectives’ with clarity in goals and Therefore, the MOU target and budgetary objectives. goals are kept identical In the MOUs for the STRUCTURE OF MOU central public sector enterprises. Very often, no distinction is made between managerial 14.6 The MOU is not merely a document, performance and enterprises performance. it is a way of life or a management system. MOU is an instrument that measures the This tool for performance improvement performance of the manager and not that of incorporates within its fold three sub-system, the enterprise. While selecting performance namely, performance information system, criteria this must he kept in mind and only those performance evaluation system and parameters that judge managerial performance incentive system. performance should be selected. 14.6.1 Performance evaluation in MOU STEP 2 - CRITERIA WEIGHT SELECTION involves five steps. First three steps are taken at the beginning of the year and the last two 14.6.1.2 Next step deals with criteria weight steps are taken at the end of the year. selection. For running an enterprise successfully a chief executive has to BEGINNING OF THE YEAR undertake a number of tasks. However, not STEP 1: CRITERIA SELECTION all the tasks are of equal importance. A smart STEP 2: CRITERIA WEIGHT SELECTION chief executive therefore, priorities his tasks STEP 3: CRITERIA VALUE SELCTION AT based on his perception of the relative THE END OF THE YEAR importance of different activities in hand. The STEP 4: PERFORMANCE EV ALUA TION perception of the chief executive and that of the owner may not coincide in this case. In STEP 5: PERFORMANCE REWARD the interest of clarity of purpose it is necessary

134 Public Enterprises Survey 2004-05 : Vol.-I that from the long list of things to do, the through a participative process. Experience manager must be told what are the relative suggests that without a participative approach, priorities so that he can allocate his time more targets tend to take the form of formal effectively in achieving those priorities. This directives which are often overtly accepted is not an academic issue. Rather, it represents and covertly resisted. a key difference between the Action Plan type - These targets should be easy to of monitoring instrument and the MOU understand and well defined. It is desirable at system. At the end of 1989-90, the this stage to also agree upon definitions of Government of India found it difficult to evaluate various criteria and methodology for the performance of PSEs based on their MOU measuring them. commitments. Thus, after a careful - The sources of information which examination of how this problem had been could assist in setting criterion values include: overcome in other countries, it was decided to introduce this system of relative weights. · The original objectives at the project formulation stage; STEP 3 - CRITERIA VALUE SELECTION · Comparisons with similar firms in the 14.6.1.3 The third step in the performance public or private sector; evaluation system relates to criteria value · Standards achieved by similar selection. To understand one needs to undertakings in other selected developed distinguish between “criteria” and “criteria and developing countries; value.” Now, kilometers per litre is a criterion · Comparisons with the performance of the to measure efficiency of all types of motor same firm in the previous years; vehicles. For example, cars, scooters, trucks · Professional judgment by third parties; and so on. However, 10 kilometers/litre may · Professional judgment at the ministry be excellent for a truck but it is terrible for a level; scooter. This value of 10 kilometers/litre is the · Professional judgment at the enterprise criteria value. It is a value, which distinguishes level. various levels of performance. In MOU we STEP 4 - PERFORMANCE EVALUATION have a 5-point scale, where “1” represents 14.6.1.4 The fourth step is taken at the end “excellent” performance and “5” represents of year, when we look at the achievements of “poor” performance. Once decided on the the PSEs and compare them with the criteria relevant set of criteria to be included in the values and determine the scores. The value MOU, their relative priorities and the criteria of the composite score will also lie between values, there is nothing to be done till the end “1” and “5”. If the management has done of the year. This, indeed, is the very heart of excellent in all fronts included in the MOU, they the MOU philosophy: Once you have specified will get a score of “1”. But, suppose, they have the objectives for the mangers you should not done terrible job on all fronts included in the interfere in the operation and wait till the end MOU, they will get a score of “5”. A mixed of the year for them to deliver the goods. In performance will get them a score selecting these criterion values (targets), the somewhere between” 1" and” 5". following points may be kept in mind. This concept of composite score is a very key - This exercise should be carried out concept in the MOU exercise. It measures the

MOU System in Central Public Sector Enterprises 135 ability of the enterprise to meet its own INSTITUTIONAL ARRANGEMENTS FOR commitments. It also allows us to compare IMPLEMENTING MOU POLICY and rank various enterprises, according to the 14.7 The basic drive for designing the composite scores, while the commitment of institutional arrangement for the MOU exercise the enterprises may be different. For example, is in response to the two major criticism the commitments of Air India and Steel levelled against the MOU system in its earlier Authroity of India are very different. Yet, years. First criticism by many PSE chief through this exercise we are able to compare executives was that the MOU was a contract their ability to meet their respective between “unequals”. They claimed that how commitments. can one party to the contract be also the judge This final step in the performance evaluation to that contract. They were referring to the exercise cannot be a mechanical procedure. fact that in the past the onus of evaluating the Everything in life does not always go according performance of PSEs against the to plans and, hence, there has to be some commitments made in the MOUs rested opportunity to deal with such exigencies in any primarily with the administrative Ministries. credible system. In the MOU system the Second major concern expressed by some review meeting at the end of the year provides observers of the MOU exercise was related another opportunity to adjust the criterion to the imbalance in technical expertise values for factors which were genuinely available between the Government and the unanticipated by both parties to the MOU i.e., PSEs. It was argued that, perhaps, factors which were not predicted and could Government was not technically equipped to not have been predicted by either party, such make a proper assessment of PSEs . In natural disasters, wars, etc. This is essential response to these concerns, the Government to keep the system “fair”. of India decided on this institutional STEP 5 - PERFORMANCE REWARD arrangement. The details of this institutional 14.6.1.5 While performance evaluation of arrangement and their inter-linkages are as follows. PSEs provides a measure of the degree of achievement of the objectives set out, 1. HIGH POWER COMMITTEE (HPC) evaluation by itself does not lead to 14.7.1 At the apex of this institutional improvement of performance. Unless arrangement is the High Power Committee performance evaluation is coupled with a (HPC) consisting of following members: system of rewards and penalties ( for good 1. Cabinet Secretary, Chairman and bad performance) and utilized as a means 2. Finance Secretary, Member for that purpose, it provides no motivation to 3. Secretary (Expenditure), Member the PSEs for improving their performance. A 4. Secretary (Planning Commission), transparent system of rewards and Member punishment is thus a corollary to the 5. Secretary (Statistics & Programme introduction of an objective performance Implementation), Member evaluation system of the PSEs. Thus a 6. Chairman (Public Enterprises Selection performance reward scheme constitutes an Board), Member essential complement of the MOU system. 7. Chairman, Tariff Commission

136 Public Enterprises Survey 2004-05 : Vol.-I 8. Chief Economic Adviser, Member and the representatives from the nodal 9. Secretary (Public Enterprises), agencies such as Planning Commission, Member-Secretary Ministry of Statistics & Programme 14.7.1.1 The functions of this committee are Implementation, Ministry of Finance, etc. to assess the performance of MOU signing The draft MOUs are discussed and enterprises with reference to the finalized during these meetings. commitments made in the MOU. It also (b) Once the MOUs have been signed, the assesses how far the administrative next step by the TF is undertaken at the ministries have been able to provide the end of the year. It is the primary necessary administrative and financial support responsibility of the Task Force to do this committed by them in the MOU. It oversees evaluation and determine the composite the functioning of the MOU system, provides score for each enterprise. In this work they guidelines and gives directions to strengthen are assisted by MOU Division. and improve the system besides taking 14.7.2.1 This Task Force members general decisions on broader issues consists of management professionals and pertaining to the improvement of the independent members with considerable performance of public enterprises. experience in managing PSEs from both 14.7.1.2 Now, the power to approve the final sides of the fence - PSEs and administrative MOUs has been delegated to TF/DPE and only ministries. It was decided by the High Power in those cases where TF is not able to take a Committee that no one belonging to the decision are referred to HPC. Government should be a member of this Task 2. TASK FORCE (TF) Force. This was considered essential to maintain objectivity and credibility of this Task 14.7.2 The main objective behind the creation Force. of an TF was to take care of the concern regarding the imbalance in technical expertise 3. MOU DIVISION available between the Government and 14.7.3 The HPC and TF are assisted by the PSEs. The main functions of the TF are: MOU Division in the Department of Public (a) to examine the design of MOU at the Enterprises. It acts as a permanent secretariat to this HPC and TF. The main beginning of the year. For this purpose the functions of this Division are: draft MOU agreed upon by the PSE and a. To re-constitute Task Force each year and the relevant administrative Ministry is provide logistical support to the Task examined by the Task Force (TF). If TF Force. It is expected to provide not only has any comments or questions regarding administrative support but also technical the draft MOUs, they seek clarifications support to the Task Force. via MOU Division. Once the signatories b. To short list PSEs for signing MOU. to MOUs have responded to the concerns c. To prepare MOU guidelines on the basis of which expressed by the TF on their draft MOUs, MOU signing PSEs draft their MOU. the MOU negotiation meetings are d. To act as buffer between the Task Force organized. These meetings are attended members and the two signatories to the by the executives of PSEs, senior officials MOUs - PSEs and Administrative of the concerned Administrative Ministry Ministries. It is expected that TF members

MOU System in Central Public Sector Enterprises 137 will have contacts with signatories to MOU guidelines indicate the broad structure and the via MOU Division only. aspects to be covered in the draft MOU e. To develop information and data base on including the weights to be given to the MOU signing PSEs. financial parameters. These guidelines reflect f. To prepare agenda and background the concerns of the Government and give the papers for the High Power Committee. general direction to the PSEs. g. To monitor the progress of MOUs. This Division keeps a tab on various stages Drafting of MOUs involved in the preparation of MOUs to 14.9.2 On the basis of these Guidelines, the ensure that all parties involved in the draft MOUs are prepared by PSEs and process adhere to the relevant deadlines. submitted to DPE after due discussions in h. To provide advice and counsel to the MOU Board and the concerned Administrative signatories on methodological and Ministry/Department in the month of conceptual aspects of the MOU policy. December. The draft MOUs received in DPE i. To coordinate research and training on are examined in MOU division in consultation various aspects of MOU policy. with members Task Force.If required, JUSTIFICATION FOR THE additional information to ensure that the INSTITUTIONAL ARRANGEMENT targets proposed in the draft MOUs are 14.8 While describing various elements of realistic and challenging is sought from PSEs/ the current institutional arrangement we put Ministries. forward the rationale for their existence. The MOU negotiation Meetings purpose of this section is to bring together these justifications at one place to present a 14.9.3 MOU negotiation meetings are held in unified picture. Therefore, in what follows we the month of February/March. Before the list the reasons why this arrangement makes meetings critiques/background papers are sense in the Indian context. prepared by MOU division on the draft MOU (i) It ensures commitment from the higher of each PSE. These meetings are attended levels of the Government. by TF members, senior officials of (ii) It enables objective, third party evaluation. administrative ministry, top executives of (iii) Task Force ensures professionalism and PSEs and representatives from nodal prevents bureaucratization. agencies of Government of India such as (iv) High Power Committee can demand Planning Commission, Ministry of Finance & recommendations information and make Ministry of Statistics & Programme binding Implementation. The targets under various (v) Ensures “fairness” and “equality” in the parameters are discussed and finalised during process of negotiation of MOUs. these meetings. WORKING OF MOU SYSTEM Signing of MOU 14.9 Issue of guidelines 14.9.4 After approval of DPE/TF, MOU is 14.9.1 The process of signing of MOU is signed by Chief Executive of the PSE & initiated by the MOU Division with the issue of Secretary of the concerned Ministry by 31st Guidelines for drafting of MOUs. These March.

138 Public Enterprises Survey 2004-05 : Vol.-I Evaluation of MOU Achievements of the MOU system 14.9.5 Performance of MOU signing PSEs 14.11 Viewed in the light of the objectives the is evaluated with reference to their MOU effectiveness of the MOU system can be targets in May/June on the basis of provisional summarised as follows: results and in October/November on the basis * Since the focus, under the MOU system, of audited data. On the basis of their has shifted to achievements of results, performance, the PSEs are graded as Ministries have begun to withdraw from “EXCELLENT”, “VERY GOOD”, “GOOD”, their tendency to control by procedures. “FAIR” & “POOR”. MOU has thus increased the operational COVERAGE OF PSEs UNDER THE MOU autonomy of the enterprises. SYSTEM * Operational autonomy has also been 14.10 The MOU system has grown at a increased by delegating more financial and steady rate and from 4 MOUs signed in the administrative powers to the MOU signing year 1987-88, 101 MOUs were signed/ PSEs. finalised for the year 2005-06. Many of these * By laying stress on marketing effort and 101 PSEs (Annexure-I) are the holding PSE’s comparing with private sector enterprises and if their subsidiaries are also included then MOU are helping PSEs to face the total no. of PSE’s covered under MOU competition. system works out to be much more. The number of MOUs signed/finalised since the * The quarterly performance review (QPR) inception of the MO U system are as follows: meetings have become more focussed since the introduction of MOUs. Discussion is confined to overall Year No. of MOU’s Year No. of MOU’s achievement as outlined in the MOUs. signed signed This has lead to higher quality of debate 1987-88 4 1997-1998 108 about PSE’s performance. 1988-89 11 1998-1999 108 1989-90 18 1999-2000 108 * By making a distinction between enterprise performance and managerial 1990-91 23 2000-2001 107 performance, MOU’s have improved the 1991-92 72 2001-2002 104 quality of debate and made the 1992-93 98 2002-2003 100 judgements on PSE managements much 1993-94 101 2003-2004 96 more fair. This has been very good for the 1994-95 100 2004-2005 103 morale of the employees who know that 1995-96 104 2005-2006 101 gross generalisation about public sector 1996-97 110 is unfair.

MOU System in Central Public Sector Enterprises 139 Performance of the MOU signing PSEs (Annexure-II) during the last five years has 14.12 The summary performance of MOUs been follows. signing PSEs as reflected in their MOU rating

Rating No. of Public Sector Enterprises during 2000-01 2001-02 2002-03 2003-04 2004-05 Excellent 50 41 46 54 42 Very Good 28 25 21 21 33 Good 09 15 12 10 12 Fair 14 12 16 11 11 Poor 05 03 02 00 01

Total 107 104 100 96 99

140 Public Enterprises Survey 2004-05 : Vol.-I Annexure-I List of PSEs covered under the MOU system for the year 2005-06

S.No. Name of the PSE S.No. Name of the PSE

Syndicate 1 (Petroleum) Syndicate 4 (Mining & Metals) 1 Indian Oil Corporation Ltd. 27 Manganese Ore India Ltd. 2 Bharat Petroleum Corpn. Ltd. 28 National Mineral Dev. Corp. Ltd. 3 Balmer Lawrie & Co. Ltd. 29 Indian Rare Earths Limited 4 Hindustan Petroleum Corpn. Ltd. 30 Mineral Exploration Corporation 5 Oil India Ltd. Limited 6 Oil and Natural Gas Corp. Ltd. 31 Uranium Corporation of India Limited 7 GAIL (India) Ltd. 32 Steel Authority of India Ltd. 33 Hindustan Copper Ltd. Syndicate 2 (Energy) 34 National Aluminium Co. Ltd. 8 Power Grid Corporation Ltd. 35 Rashtriya Ispat Nigam Ltd. 9 Coal India Ltd. 36 Mishra Dhatu Nigam Ltd. 10 North Eastern Elec. Power Corp. 37 Sponge Iron India Limited 11 National Thermal Power Corp. 38 ITI Limited 12 Nevyveli Lignite Corp. Ltd. Syndicate 5 (Electronics/ 13 Nuclear Power Corp.. Communication) 14 National Hydro-Elect.Power Ltd. 39 Bharat Electronics Ltd. 15 Satluj Jal Vidyut Nigam Limited 40 Bharat Sanchar Nigam Limited Syndicate 3 (Industrial Sector) 41 Electronics Corpn. of India Limited 16 Bharat Heavy Electricals Ltd. 42 Central Electronis Limited 17 HMT Ltd. 43 Mahanagar Telephone Nigam 18 Bharat Earth Movers Ltd. Limited 19 44 Rajasthan Electronics & 20 Hindustan Aeronautics Limited Instruments Ltd 21 Hindustan Latex Limited 45 Railtel Corpn of India 22 HMT Ltd. 46 Telecommunication Consult.(I) 23 Karnataka Antibiotics & Phar. Ltd. Limited 24 Hindustan Paper Corporation Ltd. 47 Shipping Corp. of India Ltd. 25 Indian Medicine Pharmaceuticals Syndicate 6 (Transport) Ltd. 48 Dredging Corp. of India Ltd. 26 Kudremukh Iron Ore Co. Ltd. 49 Goa Shipyard Limited

MOU System in Central Public Sector Enterprises 141 S.No. Name of the PSE S.No. Name of the PSE

50 Cochin Shipyard Ltd. 77 State Farms Corp. of India Ltd. 51 Indian Airlines Ltd. 78 Brahmputra Valley Corpn. Limited 52 Mazagaon Docks Ltd 79 North Eastern Regional Agricultural 53 Container Corp. of India ltd. 80 Engineers India Limited 54 Hindustan Shipyard Ltd. 81 IRCON International Ltd. 55 Airport Authority of India ltd. 82 Engineering Projects(I) Limited 56 Garden Reach Shipbuilders & Engg. 83 Hospital Services Cons. Ltd.. Limited Syndicate 9 (Consultancy) 57 Konkan Railway Corporation Limited 84 RITES Limited 58 Mumbai Rialway Vikas Niagam 85 Educational Consultants India Limited 59 MMTC Limited. 60 Handicraft and Handloom Corp.Ltd. 86 National Small Industries Corpn. Syndicate 7 (Trading / Service Sector) 87 National Research Development Corpn. 61 State Trading Corp. Ltd. 88 Water & Power Consul. Serv. 62 PEC Limited Limited 63 Central Cottage Industries Corp. Ltd. 89 National Building Corporation Ltd. 64 Cotton Corporation of India Ltd. 90 BroadCast Engineering 65 National Handlooms Development Consultants(I) Limited Corpn. 91 MECON Limited 66 Indian Trade Promotion Organisation 67 India Tourism Development 92 National Film Development Corpn. Corporation 93 Housing & Urban Dev. Corpn. 68 MSTC Limited 94 Rural Electrification Corpn. 69 Ferro Scrap Nigam Limited 95 IREDA 70 Hindustan Steelworks Construction Syndicate 10 (Financial Services) Ltd. 96 Export Credit Guarantee Corpn. 71 Artificial Limbs Manufacturing 97 Power Finance Corpn. Corporation 98 Indian Railway Finance Corpn. 72 Indian Railway Catering & Tourism Corp. 99 National SC Fin. & Dev. Corporation 73 Rashtriya Chem. & Fert.Ltd. 100 National BC Fin. & Dev. Corporation 74 National Seeds Corporation Ltd. 101 National Minorities Fin. & Dev. Corporation Syndicate 8 (Fertilizers) 75 Central Warehousing Corp. Ltd. 76 National Fertilizers Ltd.

142 Public Enterprises Survey 2004-05 : Vol.-I Annexure-II LIST OF CPSES ALONGWITH THEIR MOU COMPOSITE SCORES DURING 2004-05

S.No. Name of PSE MOU Score MOU Score Rating (as per PSE) (as per DPE) 1. Air India 3.69 3.69 Fair 2. Airports Authority of India 1.48 1.54 Very Good 3. Artificial Limbs Manufacturing Corporation of India * 1.80 1.71 Very Good 4. Balmer Lawrie & Co. Ltd. 1.16 1.26 Excellent 5. Bharat Dynamics Ltd. 2.83 4.32 Fair 6. Broadcast Engineering Consultants India Limited - 1.88 Very Good 7. Bharat Earth Movers Limited 1.99 1.99 Very Good 8. Bharat Heavy Electricals Limited * 1.11 1.25 Excellent 9. Bharat Electronics Limited 1.12 1.29 Excellent 10. Bharat Petroleum Corporation Ltd. 1.48 1.48 Excellent 11. Bharat Sanchar Nigam Ltd, 1.19 1.19 Excellent 12. Brahmaputra Valley Fertilisers Corp Ltd, 2.86 2.86 Good 13. Central Warehousing Corporation - 1.36 Excellent 14. Central Electronics Ltd.* 1.43 2.06 Very Good 15. Central Cottage Industries Corp. of India 2.21 2.24 Very Good 16. Coal India Limited 1.46 1.50 Excellent 17. Cochin Shipyard Limited - 3.76 18. Cotton Corporation of India Ltd. 1.48 1.46 Excellent 19. Container Corporation of India 1.05 1.05 Excellent 20. Dredging Corporation of India 2.12 2.12 Very Good 21. Educational Consultants India Ltd. 4.44 4.44 Fair 22. Electronics Corp. Of India Ltd. 3.32 3.32 Good 23. Engineering Projects (India) Ltd. 2.84 2.92 Good 24. Engineers India Ltd.* 1.53 2.38 Very Good 25. Export Credit Guarantee Corp. 1.56 1.56 Very Good 26. Ferro Scrap Nigam Ltd. 1.83 1.83 Very Good 27. Fertilizers and Chemicals (T) Ltd. 2.10 2.09 Very Good 28. Goa Shipyard Ltd. 1.91 1.89 Very Good 29. Garden Reach Shipbuilders &Eng. Ltd. 2.01 2.10 Very Good 30. Gas Authority of India Ltd.* 1.00 1.24 Excellent 31. Hindustan Paper Corporation 1.42 1.43 Excellent 32. Hindustan Petroleum Corp. Ltd 1.42 1.42 Excellent 33. Hindustan Shipyard Limited * 4.04 4.10 Fair 34. Handicrafts & Handlooms Export Corpn. 2.60 2.57 Good

MOU System in Central Public Sector Enterprises 143 35. Hindustan Aeronautics Ltd. 1.00 1.00 Excellent 36. Hindustan Latex Ltd.* 1.17 1.28 Excellent 37. Hindustan Copper Ltd. 2.31 2.17 Very Good 38. HMT Ltd. 4.65 4.65 Poor 39. Hospital Services Consultancy Corp. 3.29 3.29 Good 40. Housing & Urban Dev. Corp.* 1.22 1.22 Excellent 41. Hindustan Steelworks Construction Ltd. 3.19 3.40 Good 42. Indian Medicines Pharmaceuticals Corporation Ltd, 3.79 Fair 43. India Trade Promotion Organisation * 1.51 1.58 Very Good 44. India Tourism Development Corp. 1.95 1.75 Very Good 45. Indian Airlines 2.15 2.15 Very Good 46. Indian Oil Corporation Ltd. 1.13 1.13 Excellent 47. Indian Renewable Energy Dev. Agency 2.74 2.74 Good 48. Indian Rare Earth Ltd. 1.70 1.70 Very Good 49. Indian Railway Finance Corp. 1.00 1.05 Excellent 50. IRCON International Ltd. 1.31 1.31 Excellent 51. ITI Ltd.* 2.42 3.48 Good 52. Karnataka Antibiotics & Pham.Ltd. 1.21 1.21 Excellent 53. Kudremukh Iron Ore Co. Ltd.* 1.43 1.43 Excellent 54. Konkan Railway Corporation Ltd. 4.12 4.28 Fair 55. Madras Fertilizers Ltd. 4.06 4.06 Fair 56. Manganese Ore (India) Ltd.* 1.27 1.47 Excellent 57. Mazagoan Dock Ltd. 2.25 2.25 Very Good 58. MECON Ltd. 2.10 2.10 Very Good 59. Mineral Exploration Corporation Ltd. 1.50 1.54 Very Good 60. Mishra Dhatu Nigam Ltd. 1.08 1.08 Excellent 61. MMTC Ltd. 1.08 1.08 Excellent 62. Mahanagar Telephone Nigam Ltd. 2.35 2.36 Very Good 63. MSTC Ltd. 1.04 1.04 Excellent 64. National Hydroelectric Power Corp.* 1.37 1.44 Excellent 65. National Thermal Power Corpn.* 1.00 1.11 Excellent 66. National Aluminium Co. Limited 1.26 1.27 Excellent 67. National Small Industries Corpn. 3.39 3.41 Good 68. National Building Const. Corp.* 1.18 1.19 Excellent 69. National Seeds. Corpn. 3.27 3.18 Good 70. National Backward Classes Fin. & Development Corpn. 1.00 1.00 Excellent 71. National Mineral Dev. Corp. 1.19 1.19 Excellent 72. National Film Development Corp. 4.30 4.28 Fair 73. National Fertilizes Ltd. 1.28 1.28 Excellent

144 Public Enterprises Survey 2004-05 : Vol.-I 74. National Handloom Dev. Corp. 2.23 2.23 Very Good 75. National Minorities Fin. & Dev. Corp. 1.41 1.41 Excellent 76. National Research Dev. Corpn. 2.19 2.47 Very good 77. Neyveli Lignite Corpn.* 1.29 1.32 Excellent 78. North Eastern Electric Power Corp.* 1.27 1.75 Very Good 79. Nuclear Power Corpn. Ltd. 1.45 1.45 Excellent 80. Oil India Limited* 1.33 1.69 Very Good 81. Oil & Natural Gas Co. Ltd. 1.77 1.61 Very Good 82. Power Finance Corpn. Ltd.* 1.02 2.39 Very Good 83. Power Grid Corpn. of India Ltd. 1.00 1.01 Excellent 84. PEC Limited 1.44 1.44 Excellent 85. RITES Limited 2.20 2.28 Very Good 86. Rashtriya Chemicals & Fertilizers Ltd. 1.14 1.14 Excellent 87. Rashtriya Ispat Nigam Ltd.* 1.32 1.32 Excellent 88. Rural Electrification Corpn. 1.00 1.00 Excellent 89. Rajasthan Electronics & Instrumentation Ltd, * 1.40 1.52 Very Good 90. Satluj Jal Vidyut Nigam Ltd,* - 2.59 Good 91. Scooters India Ltd - 3.13 Good 92. Shipping Corpn. of India Ltd. 1.28 1.28 Excellent 93. Sponge Iron India Ltd.. 2.13 2.13 Very Good 94. State Trading Corpn. of India Ltd,* 1.00 1.66 Very Good 95. State Farms Corporation of India Ltd. - 4.06 Fair 96. Steel Authority of India Ltd.* 1.09 1.32 Excellent 97. Telecommunication Consultant of (I) Ltd.* 1.43 1.50 Fair 98. Uranium Corporation of India Ltd.* 1.46 1.97 Very Good 99. Water & Power Consultancy Ser. (I) Ltd. 1.30 1.31

MOU Composite Score MOU Rating 1.00 – 1.50 Excellent 1.51 – 2.50 Very Good 2.51 – 3.50 Good 3.51 – 4.50 Fair 4.51 – 5.00 Poor

MOU System in Central Public Sector Enterprises 145 15 SOCIO-ECONOMIC AND WELFARE MEASURES

15.1 Even in the changing economic ecological and social environment are also scenario, where commercial viability has considered and kept in view. The township taken priority, Public Enterprises, as a model and its related facilities like parks, green employer, have continued to recognize and belts, play grounds etc. have been developed accordingly. Owing to location of render their social responsibilities towards the projects and other reasons, wherever welfare of employees of the PSEs. Their the employees have not been provided with contribution is of great importance for the housing and other facilities, they have been projects located in green field areas and compensated with house rent allowance as away from the existing towns and villages in admissible, medical allowance, children inaccessible areas in line with the country's education allowance and other allowances socio-economic goals. Housing has been in such cities/towns. considered as an important factor in bringing 15.3 Public sector enterprises have belongingness of the employees with the incurred with significant recurring and non- organization and thereby promoting better recurring expenditure on promotion of these industrial climate including higher basic amenities. Non-recurring expenditure is productivity. Apart from housing the public the capital cost incurred by way of land acquisition of the townships, construction of sector enterprises have also taken lead by residential and non-residential buildings with providing other essential community facilities necessary facilities etc. Recurring like heath-care, education, shopping and expenditure is incurred by way of recreation centers, safety etc., in their maintenance, repairs and operating costs for township. services like water, power, sewerage, roads 15.2 Within the limited resources and etc. provided to the employees. The table recognizing the need of the employees, given below indicates the capital expenditure on township incurred by the public Public Enterprises have taken all possible enterprises in relation to their gross fixed efforts to provide housing facilities to the assets in the last three years— maximum satisfaction of their employees. To have a planned orientation of the township,

(Rs. in crore)

As on Gross Block including Total Capital Expenditure Percentage of col. 3 Capital Work in Progress on Townships to col. 2

(1) (2) (3) (4)

31.3.2003 525301 5771 1.10

31.3.2004 596727 6355 1.06

31.3.2005 649159 6163 0.95

146 Public Enterprises Survey 2004-05 : Vol.-I 15.4 The capital expenditure made during the last two years under different Sectoral groups of enterprises are as under—

(Rs. in crore)

Sl. No. Cognate Group Capital Expenditure on Township

2004-05 2003-04 (1) (2) (3) (4)

I. Enterprises under construction 2.65 39.61

II. Manufacturing and Service Enterprises

1. Steel 312.59 309.58

2. Minerals and Metals 524.07 497.47

3. Coal and Lignite 2544.77 2486.51

4. Power 613.52 1025.30

5. Petroleum 762.26 1078.03

6. Fertilizer 108.70 140.99

7. Chemicals and Pharmaceutical 7.85 5.38

8. Heavy Engineering 201.60 222.93

9. Medium and Light Engineering 146.61 109.48

10. Transportation Equipments 184.72 38.08

11. Consumer Goods 81.91 81.68

12. Agro-based Industries 0.00 0.00

13. Textiles 1.41 1.76

14. Trading and Marketing Services 27.82 28.13

15. Transportation Services 213.90 194.27

16. Contract and Construction Services 63.70 26.20

17. Industrial Dev. and Tech. Consultancy Services 365.04 68.78

18. Tourist Services 0.00 0.00

19. Financial Services 0.00 0.00

20. Telecommunications and Information Technology 0.00 0.00

21. Section 25 Companies 0.34 0.34

Total 6163.46 6354.52

Socio-Economic and Welfare Measures 147 Staff strength and houses constructed Expenditure on Township Maintenance, 15.5 The total number of houses Administration and Social Overheads constructed by the enterprises as on 15.6 The expenditure on township 31.3.2005 was 8,39,829 and the number of maintenance, administration and social houses under construction as on that date overheads like education, medical and was 14787. This meets the housing need of cultural facilities incurred during the year 50.47% of the total employees. 2004-05 has been Rs.3097.53 crore as 15.5.1 The company-wise and group-wise against Rs. 2928.67 crore during the information showing staff strength, number previous year. of houses constructed and number of 15.6.1 The gap between annual expenditure houses under construction is available in the on maintenance as compared to income is Statement No. 26 of this volume. given below:

(Rs. in crore)

Year Gross Expenditure on Income from Rent Gap between township Maintenance and Receipt etc. Gross Expenditure Social Overheads and Receipts

(1) (2) (3) (4)

2002-03 3146.88 214.48 2932.40

2003-04 2928.67 235.57 2693.10

2004-05 3097.53 351.17 2746.36

15.7 The cognate group wise details on Statement No. 27 of this volume. township maintenance are available in the

148 Public Enterprises Survey 2004-05 : Vol.-I 16 PROMOTION OF BALANCED REGIONAL DEVELOPMENT

16.1 One of the objectives of setting up of Government became the direct beneficiaries public enterprises was to promote balanced and stand to gain manifold in terms of regional development. In order that removal of regional imbalances, increased industrialization may benefit the economy of employment opportunities, balanced growth the country as a whole, it is important that of small scale and ancillary industries, disparities in levels of development between resource mobilization etc. Any study of the different regions are progressively reduced. benefits flowing from the central public sector The pace of economic development of enterprises to the economy will remain different States and Regions in the country incomplete if these contributions to the State has not been uniform over the years owing economies are not taken into account. to historic reasons and a number of other 16.3 Industrialisation plays an important factors. Even the States which are fairly well role in correcting the regional imbalances developed, have pockets and areas which and accelerating the industrial growth. In have not been able to keep pace with the order to remove regional inequalities and progress achieved elsewhere. The lack of encourage balanced industrial growth of industries in different parts of the country are different States/Regions, subsidies to often due to the factors such as non- industries set up in backward districts/non- availability of the raw material or other natural industry districts are given. While deciding on resources, non-availability of power, water the locations of central public sector supply and transport facilities which have not enterprises, due consideration is also given been developed there. Therefore oneof the to backwardness of the regions. aims of the national planning is to ensure that these facilities are steadily made 16.4 Another dimension of the balanced available to areas which are at present regional development through setting up lagging behind. Recognising the existence of public enterprises is the expansion of the these disparities in economic development of employment opportunities in the backward different States/Regions, the Industrial Policy regions. The establishment of central public Resolution adopted by the Parliament in 1956 sector enterprises has resulted in generation and subsequent Resolutions, emphasized of substantial employment, both direct and the need of accelerated rate of economic indirect in the States where the units are growth and speedy industrialization and located. The work force recruited locally in removal of imbalances in the levels of these enterprises, constitute a substantial development between different regions/ portion of the total employment. State-wise areas. distribution of gross block and employment for the year 2004-05 and 2003-04 is given in 16.2 The States in which the public sector Table No. 16.1. enterprises have been set up by the Central

Promotion of Balanced Regional Development 149 Table 16.1 Statewise Distribution of Gross Block and Employment (Gross Block-Rs. in Crore) (Employment-No.in Lakh)

S. State/Union Territory As on 31.3.2005 As on 31.3.2004 %age share as on Ranking as on No. 31.3.2005 31.3.2005 Gross Employ- Gross Employ- Gross Employ- Gross Employ- Block ment Block ment Block ment Block ment 1. Andhra Pradesh 44545.73 0.99 42433.22 1.01 6.86 5.85 3 7 2. Arunachal Pradesh 2961.14 0.02 2183.15 0.02 0.46 0.12 23 25 3. Assam 28153.81 0.51 26334.44 0.53 4.34 3.01 10 12 4. Bihar 12086.79 0.18 10403.24 0.19 1.86 1.06 19 19 5. Chhattisgarh 16072.47 1.00 12089.73 1.04 2.48 5.91 17 6 6. Delhi 21713.24 0.79 20249.20 0.76 3.34 4.67 12 10 7. Goa 436.65 0.03 395.93 0.02 0.06 0.18 27 23 8. Gujarat 42295.53 0.50 39156.40 0.53 6.51 2.95 5 13 9. Haryana 16541.77 0.21 13016.90 0.20 2.55 1.24 16 18 10. Himachal Pradesh 17390.10 0.10 16301.70 0.11 2.68 0.59 14 21 11. Jammu & Kashmir 11764.22 0.09 11002.75 0.09 1.81 0.53 21 22 12. Jharkhand 20654.82 2.31 22869.12 2.49 3.18 13.64 13 1 13. Karnataka 28543.88 0.81 29572.93 0.83 4.40 4.78 9 9 14. Kerala 16828.32 0.42 15300.80 0.45 2.59 2.48 15 15 15. Madhya Pradesh 29830.52 1.09 27655.11 1.10 4.60 6.44 8 4 16. Maharashtra 122899.24 2.01 107826.07 2.08 18.93 11.87 1 2 17. Manipur 261.48 0.01 242.11 0.01 0.04 0.06 28 29 18. Meghalaya 224.17 0.01 186.36 0.02 0.03 0.06 29 30 19. Nagaland 1075.43 0.01 1054.59 0.01 0.17 0.06 26 28 20. Orissa 33354.47 0.69 31415.45 0.68 5.14 4.08 6 11 21. Punjab 9288.04 0.27 8704.52 0.28 1.43 1.59 22 17 22. Rajasthan 13900.88 0.30 15399.46 0.31 2.14 1.77 18 16 23. Sikkim 1990.52 0.01 1566.39 0.01 0.31 0.06 24 32 24. Tamilnadu 43475.42 1.09 38517.46 0.88 6.70 6.44 4 5 25. Tripura 1659.58 0.02 1488.25 0.02 0.26 0.12 25 27 26. Uttar Pradesh 45738.01 0.90 39933.27 0.89 7.04 5.32 2 8 27. Uttaranchal 11767.38 0.16 11526.08 0.20 1.81 0.95 20 20 28. West Bengal 31397.67 1.92 29377.57 2.19 4.84 11.34 7 3 29. Andaman & Nicobar Islands 199.93 0.02 199.10 0.02 0.03 0.12 30 26 30. Chandigarh 99.83 0.01 99.67 0.01 0.02 0.06 31 31 31. Pondicherry 123.06 0.02 85.65 0.02 0.01 0.12 32 24 32. Others and Unallocated 21884.90 0.43 19803.79 0.61 3.37 2.54 11 14 Total : 649159.00 16.93 596726.65 17.62 100.00 100.00 - -

150 Public Enterprises Survey 2004-05 : Vol.-I DEPARTMENT OF PUBLIC ENTERPRISES AND ITS 17 ROLE IN MANAGEMENT OF PUBLIC ENTERPRISES.

INTRODUCTION ROLE AND TASKS 17.1 Department of Public Enterprises 17.3 The important role and tasks of the (DPE) is an outcome of the recommendations Department of Public Enterprises are listed of the Estimates Committee of 3rd Lok Sabha below:- made in their 52nd Report stressing a need i) To coordinate matters of general policy for setting up a centralized coordinating unit of non-financial nature relating to public which could also make continuous appraisal sector enterprises. of the performance of Public Enterprises. ii) Matters relating to issue of Presidential This led to the setting up of the Bureau of Directives and guidelines to Public Public Enterprises (BPE) in 1965. BPE was Sector Enterprises. later constituted as an independent administrative unit within the Ministry of iii) Formulation of Policy guidelines Finance, Department of Expenditure in 1969. pertaining to Public Sector Enterprises As a result of the reorganization of the in areas like, board structures, Ministries/Departments of the Central personnel management, performance Government in September, 1985, BPE was improvement and evaluation, financial made as part of Ministry of Industry. In May, management, wage settlement, 1990, BPE was conferred the status of a full- vigilance management, performance fledged Department and is now known as the appraisal etc. Department of Public Enterprises (DPE) in iv) Matters relating to reservation of posts the Ministry of Heavy Industries & Public in the Public Sector Enterprises for Enterprises. certain classes of citizens. 17.2 DPE acts as a nodal agency for all v) Matters relating to Memorandum of Central Public Sector Enterprises (CPSEs) Understanding between the Public and assists in policy formulation pertaining Sector Enterprises and the to the role of PSEs in the economy. DPE administrative Ministries/Departments. issues policy guidelines on performance vi) Matters relating to delegation of powers improvement, evaluation, financial to Board of Directors. accounting, personnel management and in related areas concerning the management vii) To undertake studies in respect of of CPSEs. It collects, evaluates and significant areas of functioning of maintains information on several areas in Central PSEs. respect of PSEs. In fulfilling its role, it viii) Matters relating to International Centre associates itself with other ministries and for Promotion of Enterprises (ICPE). organizations as well as premier ix) Matters relating to Standing management and accounting institutes in the Conference of Public Enterprises country. (SCOPE)

Department of Public Enterprises and Its Role in Management of Public Enterprises 151 x) To act as a repository of data and to Retraining and Redeployment Scheme bring out an annual survey of PSEs (CRR) for rationalized employees of known as Public Enterprises Survey. CPSEs. xi) Settlement of disputes through ORGANIZATIONAL STRUCTURE Permanent Machinery of Arbitration 17.4 DPE is under the charge of the (PMA) among Public Sector Enterprises Minister of State (Independent charge) in the and between Public Sector Enterprises Ministry of Heavy Industries and Public and government departments except Enterprises. The Department is headed by disputes relating to tax matters. a Secretary, assisted by an establishment xii) Advise on establishing new Central with an overall sanctioned strength of 128 PSEs including their capital and officers/personnel. organizational structure and 17.4.1 The Department has 5 constituent Memorandum and Articles of divisions namely the Financial Policy Division, Association. the Management Policy Division, the MOU xiii) Policy matters relating to composition Division, the Administration & Co-ordination of Board of Directors of PSEs, Division and the Permanent Machinery of categorization of top posts, scheduling Arbitration. The organizational structure of of PSEs. the Department is given at page___. The xiv) Notification of pay scales of Board level Financial Policy Division deals with matters executives as well as below Board level relating to Restructuring/Revival of CPSEs, personnel and unionized workers and Policy on financial management of the PSEs, the DA admissible thereon at periodic compilation of performance data in the form intervals. of Public Enterprises Survey, Purchase Preference Policy, Salary and Wage Policies xv) Co-ordination of training programmes for employees/workers of CPSEs, finalisation for managerial personnel in Public of terms and conditions and determination Sector Enterprises. of pay of Board level executives, finalisation xvi) Policy relating to deputation of of terms and conditions of civil servants Government Officers to Public Sector deputed to CPSEs, Voluntary retirement Enterprises. schemes and the CRR Scheme. The xvii) To consider matters relating to Board Management Policy Division handles matters for Reconstruction of Public Sector relating to Human Resource Development, Enterprises (BRPSE). Organizational structuring/restructuring and creation of Board level posts in PSEs, xviii) To advise in respect of proposals on personnel and general management policies, restructuring, joint ventures, Search Committee for selection of non-official disinvestments, issue of fresh capital pt. Time directors, Discipline, Conduct & etc. of PSEs received from Appeal Rules and Vigilance policies, administrative Ministries/Departments. Navratna and Miniratna etc. The main xix) Voluntary Retirement Scheme in functions of MOU Division include providing CPSEs. logistical, technical and administrative xx) Matters relating to Counseling,

152 Public Enterprises Survey 2004-05 : Vol.-I support to the Task Force, act as buffer of sick/loss making CPSEs for their turn between the Task Force members and the around and to make suitable signatories to the MOUs, develop information recommendations related thereto; to advise and data base on MOU signing PSEs, to the Government on disinvestment/closure/ assist the High Power Committee, monitor sale of chronically loss making companies the progress of MOUs, to advise and counsel which can not be revived and advise the the MOU signatories and coordinate research Government about sources of fund for the and Training etc. The Permanent Machinery payment of all legitimate dues and of Arbitration has been set up to resolve compensation to workers and other costs of disputes between PSEs inter-se as well as closure; to monitor incipient sickness in between a PSE and a Central Government CPSEs and advise the Government on such Department/Ministry. other matters as may be assigned to it. The 17.4.2 A Board for Reconstruction of Public Board consists of a part-time Chairman and Sector Enterprises has been set up to advise three non-official part time members. the Government on ways and means for Secretary (Expenditure), Secretary strengthening Public Sector Enterprises in (Disinvestment) are official members with general and making them more autonomous Secretary (PE) as Member Secretary. and professional; to consider restructuring of Chairman, PESB, Chairman, SCOPE and CPSEs and suggest ways and means for CMD, ONGC are the permanent invitees. funding such restructuring schemes; to Secretary of the concerned administrative examine the revival/restructuring proposals Ministry is the special invitee.

Financial Policy Division Public Enterprises Survey Unit Policy Planning Unit CRR Unit Wage policy Unit

Management Division Personnel Policy Unit Training Unit Performance Indicator and work Norms Unit (PIWN Unit) SC & ST Cell

DPE MOU Division MOU Unit, Data Bank

Administration & Coordination Administration Division Library Parliament Coordination Hindi Cell

PMA PMA Unit

Department of Public Enterprises and Its Role in Management of Public Enterprises 153 PERFORMANCE OF CENTRAL PUBLIC SECTOR 18 ENTERPRISES DURING FIRST SIX MONTHS OF 2005-06

18.1 In this chapter an analysis of the position based on available information is financial and physical performance of given in the following paragraphs: Central Public Sector Enterprises (CPSEs) Financial Performance for the first six months of 2005-06 i.e. April- 18.1.1 The financial performance of the 172 September, 2005 is brought out based on CPSEs for April-September, 2005 as the flash results furnished by 172 compared to the corresponding period of enterprises out of 227 CPSEs which were last year is given in the following table: in operation as on 31.3.2005. The analytical Table-18.1 (Rs. in crore) S. Particulars April-September Difference over No. 2005 2004 previous year

1 Turnover/Operating income 346355 299532 46823 2 Capital Employed (Yearly basis) 437203 386228 50975 3 Profit Before Dep., Int. & Tax (PBDIT) 60986 57276 3710 4 Depreciation 15722 15684 38 5 Profit Before Interest & Tax (PBIT) 45264 41592 3672 6 Interest 6950 5852 1098 7 Profit Before Tax (PBT) 38314 35740 2574 8 Tax Provisions 11102 10022 1080 9 Net Profit 27212 25718 1494 10 Profit of profit making PSEs 30762 27960 2802 11 Loss of loss incurring PSEs -3550 -2242 1309 12 No. of Profit making PSEs 101 101 - 13 No. of Loss Incurring PSEs 67 68 - 14 No. of no profit/no loss PSEs 4 3 - 15 Financial Ratio (%)(Yearly Basis): A Turnover to Capital Employed 79.22 77.55 - B PBDIT to Capital Employed 13.95 14.83 - C PBIT to Capital Employed 10.35 10.77 - D PBDIT to Turnover 17.61 19.12 - E PBIT to Turnover 13.07 13.89 - F Net Profit to Turnover 7.86 8.59 -

154 Public Enterprises Survey 2004-05 : Vol.-I 18.1.2 The major features of the financial 13.20 % i.e. from Rs.386228 crore to Rs. performance are as under: 437203 crore. · Turnover / operating income has · Central Public Sector Enterprises have increased by Rs.46823 crore i.e. from earned a return on investment (profit Rs.299532 crore to Rs.346355 crore, before interest and tax to capital which is higher by 15.63 %. employed) of 10.35 % during April- · Net Profit has increased by Rs.1494 September, 2005 as against 10.77% crore, i.e. from Rs.25718 crore as on earned during the corresponding period 30.9.2004 to Rs.27212 crore as on of 2004. 30.9.2005 showing a rise of 5.81 %. · Turnover to Capital Employed ratio · Profit before depreciation, interest has increased to 79.22% from 77.55 %. and tax (PBDIT) has also increased by Sector-wise Analysis in terms of Rs.3710 crore i.e. from Rs.57276 crore Turnover and Profitability to Rs.60986 crore i.e. a rise of 6.48% 18.2 The Central Public Sector Enterprises · Profit before interest & tax (PBIT) has have been classified in 21 different increased by 8.83 % i.e. from Rs. 41592 congnate groups/sectors based on crore to Rs 45264 crore. similarities in their functioning. The sector- wise performance in terms of turnover and · Capital employed has increased by profitability is given at Table 18.2 below:

Table 18.2 (Rs. in crore)

Sl. Cognate Groups Turnover during Profit / Loss (-) during No. April-September April-September 2005 2004 Difference 2005 2004 Difference (I) Enterprises Manufacturing/Producing Goods: 1 STEEL 19015.88 17348.27 1667.61 2865.79 3607.87 -742.08 2 MINERALS AND METALS 5229.19 4282.16 947.03 1626.49 1091.01 535.48 3 COAL AND LIGNITE 13067.22 12614.22 453.00 3752.48 1827.69 1924.79 4 POWER 12783.77 10922.37 1861.40 2933.44 2279.02 654.42 5 PETROLEUM 217541.21 184064.31 33476.90 9821.51 11692.96 -1871.45 6 FERTILIZERS 4384.25 4157.33 226.92 -52.78 -93.18 40.40 7 CHEMICALS AND PHARMACEUTICALS 383.96 505.78 -121.82 -69.84 -29.01 -40.83 8 HEAVY ENGINEERING 5133.58 3316.36 1817.22 128.25 -15.99 144.24 9 MEDIUM AND LIGHT ENGINEERING 3060.14 3070.32 -10.18 -357.24 -409.25 52.01 10 TRANSPORTATION EQUIPMENT 6585.65 3064.78 3520.87 597.54 114.01 483.53 11 CONSUMER GOODS 463.37 464.26 -0.89 -39.99 -41.33 1.34 12 AGRO-BASED INDUSTRIES 55.96 50.65 5.31 -12.06 -9.31 -2.75 13 TEXTILES 402.68 424.36 -21.68 -329.86 -444.18 114.32

Performance of Central Public Sector Enterprises 155 (Rs. in crore)

Sl. Cognate Groups Turnover during Profit / Loss (-) during April-September April-September 2005 2004 Difference 2005 2004 Difference TOTAL A : 288106.86 244285.17 43821.69 20863.73 19570.31 1293.42

(II) Enterprises Rendering Services: 14. TRADING AND MARKETING SERVICES 17869.88 19871.97 -2002.09 392.98 383.35 9.63

15. TRANSPORTATION SERVICES 10333.30 6776.00 3557.30 728.94 797.57 -68.63

16. CONTRACT AND CONSTRUCTION SERVICES 1655.12 1180.97 474.15 -149.69 -182.89 33.20

17. INDUSTRIAL DEV. AND TECH. CONSULTANCY SERVICES 2740.58 2288.98 451.60 559.42 358.58 200.84

18. TOURIST SERVICES 284.38 232.06 52.32 1.12 -7.49 8.61

19. FINANCIAL SERVICES 5463.07 5897.04 -433.97 1622.13 2043.56 -421.43

20. TELECOMMUNICATIONS AND INFORMATION TECH 19814.99 18938.44 876.55 3189.30 2746.85 442.45

21. SECTION 25 COMPANIES 87.05 61.59 25.46 4.17 8.65 -4.48

TOTAL B : 58248.37 55247.05 3001.32 6348.37 6148.18 200.19

GRAND TOTAL (A+B ) : 346355.23 299532.22 46823.01 27212.10 25718.49 1493.61

18.2.1. It is observed that the CPSEs as a year. The manufacturing sector has indicated whole have registered a growth of 15.63 % a rise of about 6.61% in net profit than the in turnover during first six months of 2005- performance of services sector, which has 06 as compared to the corresponding period shown increase of 3.26%. 14 out of 21 sectors of last year. The manufacturing sector has have improved their profitability. The major fall indicated better growth of about 17.94% in is in Petroleum, Steel, Financial Services, turnover than the performance of service Transportation Services, Chemicals & sector, which is 5.43%. 6 sectors, out of 21 Pharmaceuticals, Section 21 Companies and sectors, namely Chemicals & Agro Based Industries. The main CPSEs that Pharmaceuticals, Medium & Light have shown fall in profitability are Bharat Engineering, Consumer goods, Textiles, Petroleum Cop. Ltd. (BPCL), Hindustan Trading and Marketing Services and Petroleum Corp. Ltd. (HPCL) and Indian oil Financial services have recorded negative Corporation (IOC) in petroleum sector, RINL trend of growth in turnover. and SAIL in Steel sector, Air India (AI) and 18.2.2 As regards profitability, the CPSEs as Shipping Corporation of India in Transportation a whole have registered a rise of 5.81 % in net services sector and power finance corporation profit during first six months of 2005-06 as in sivialicial (SCI) in Transportation services compared to the corresponding period of last sector and Power Finance Corporation in

156 Public Enterprises Survey 2004-05 : Vol.-I Financial Service Sector. of Transportation services sector the fall is 18.2.3 The fall in profitability of petroleum due to fall in other income of SCI. AI has not sector is due to non-revision of retail selling furnished any reasons for losses. prices matching with the movement of Physical Performance international prices / lower marketing margins, higher loss on LPG and absence 18.3 Physical performance for some of pool claims. In case of steel sector the major products of CPSEs during first six fall is attributed to higher provision of regular months of 2005-06 as compared to the tax liability in current year, lower net sales corresponding period of 2004-05 are realization (NSR) and increase in raw summarised below: material prices and other input cost. In case

Table 18.3 Physical Performance of Central Public Sector Enterprises During First Six Months of 2005-06

Products Unit April-September Increase/ 2005 2004 Decrease (-) (%) 1 Ingot / Crude Steel (SAIL) 000 T 6239.20 5550.80 688.40 12.40% 2 Saleable Steel (SAIL+IISCO+RINL) 000 T 7284.14 6686.80 597.34 8.93% 3 Pig Iron (SAIL+IISCO+RINL) 000 T 494.26 168.79 325.47 192.83% 4 Sponge Iron (SPONGE IRON) 000 T 25.29 28.26 -2.97 -10.51% 5 Raw Coal (CIL and its Subsidiaries) MT 150.62 142.45 8.18 5.74% 6 Lignite (NLC) MT 11.07 10.85 0.22 2.03% 7 Alumina (NALCO) 000 MT 789.80 780.00 9.80 1.26% 8 Aluminium (NALCO) 000 MT 178.10 156.63 21.47 13.71% 9 Refined Copper (HCL) 000 T 17.45 10.72 6.73 62.78% 10 Wirerod (HCL) 000 T 14.39 11.15 3.24 29.06% 11 Crude Oil (OIL+ONGC) MMT 13.95 14.87 -0.92 -6.19% 12 Gas Production (OIL+ONGC) BCM 22.42 21.08 1.34 6.35% 13 Power Generation (NLC+NTPC+NEEPC) MU 94938.13 88900.75 6037.38 6.79% 14 UREA (MFL+NFL+RCF+ BVFCL) 000 MT 2868.34 2936.26 -67.92 -2.31% 15 NPK (MFL+RCF) 000 MT 330.53 484.35 -153.82 -31.76% 16 Biofertilizers (MFL) MT 134.00 72.00 62.00 86.11% 17 LPG (OIL+NRL+CPCL) 000 MT 214.23 111.89 102.34 91.46% 18 Paper (NEPA+HPC and its subsidiaries ) 000 MT 166.77 163.07 3.70 2.27% 19 Condoms (HLL) M.Pcs 484.15 458.14 26.01 5.68% 20 Copper-T (HLL) M.Pcs 1.83 0.70 1.13 161.43% 21 Power Transformer BHEL MVA 4728.00 3413.00 1315.00 38.53%

Performance of Central Public Sector Enterprises 157 18.3.1 It is observed that the physical qualitative raw materials due to heavy rains performance has generally increased during in case of Sponge Iron India Ltd. The fall first six months of 2005-06 as compared to in natural gas production is due to fire at the corresponding period of 2004-05. There BHN platform of ONGC causing shutdown is fall in the production of 4 products of all wells connected to BHN. The covered in analysis out of 21 products production of UREA at Trombay unit of RCF namely sponge iron, Crude oil, UREA and plant is affected due to flood / gas shortage. NPK Products. The reasons for decrease in The reduction in NPK production is due to production include maintenance works Imported Phosphoric Acid limitation. undertaken and shortage of availability of

158 Public Enterprises Survey 2004-05 : Vol.-I 19 REVIVAL AND RESTRUCTURING OF SICK/LOSS MAKING CPSE S

19.1 The National Common Minimum schemes in case of enterprises found viable Programme (NCMP) stipulates that the and recommend winding up/closure in respect Government is committed for a strong and of enterprises found non-viable. In respect of efficient Public Sector whose social objectives other CPSEs the concerned administrative are met by its commercial functioning. While Ministries/Departments take suitable action. every effort will be made to modernize and 19.3 Reasons for losses/sickness are restructure sick public sector companies and manifold and may vary from unit to unit. revive sick industry, chronically loss-making However, some common problems faced/ companies will either be sold-off, or closed, being faced by sick and loss making CPSEs after all workers have got their legitimate dues include old and obsolete plant and machinery, and compensation. The private industry will outdated technology, resource crunch, low be inducted to turn-around companies that capacity utilization, excess manpower, heavy have potential for revival. interest burden, weak marketing strategies, stiff competition, reluctance of financial 19.2 Sickness in CPSEs has been the institutions to provide funds for revival/ subject matter of concern in the Government rehabilitation, high input cost, erosion of net- for quite some time particularly in the changed worth due to continuous losses and inherent economic environment wherein resource problems of sick taken over enterprises, etc. generation through commercial functioning of enterprises is of paramount importance. 19.4 Recognizing the socio-economic role There are certain enterprises, which have being played by CPSEs in the development been incurring losses continuously for the last of the country, Government has evolved several years and in a number of cases their strategies from time to time for strengthening accumulated losses have surpassed the CPSEs. Some of the strategies for networth making the enterprises financially restructuring/revival of CPSEs including sick weak. Out of 217 operating CPSEs which units on long-term basis include: have furnished information as on 31.3.2005, - Revival of PSEs through the process of 73 had incurred a loss of Rs. 9003 crore BIFR; during 2004-05. Accumulated losses in - Financial restructuring wherever respect 81CPSEs have exceeded their appropriate; respective net worth over the years although - Formation of joint ventures by induction some of them have recorded profit during last of partners capable of providing technical, one or two years. Under the provisions of Sick financial and marketing inputs; Industrial Companies (Special Provisions) - Infusion of fresh funds; Act, 1985 (SICA) the industrial CPSEs whose - Organizational and business accumulated losses have exceeded their net restructuring; worth are referred to the Board for Industrial - Manpower rationalization through and Financial Reconstruction(BIFR) which approved Voluntary Retirement Scheme approves suitable revival/rehabilitation (VRS);

Revival and Restructuring of Sick/ Loss making CPSEs 159 - Improved marketing strategies; ‘sick’ if it has accumulated losses in any - Cost control measures, etc. financial year equal to 50% or more of its average net worth during 4 years immediately 19.5 The major strategies for restructuring preceding such financial year and / or a of CPSEs including sick units on long term company which is a sick company within the basis may include:- meaning of Sick Industrial Companies (i) Financial restructuring: Investment (Special Provisions) Act, 1985 (SICA). The is made in the form of equity participation, concerned administrative Ministries have loan, non-plan assistance or through the been advised to send proposals of their revival packages which involve sustainable CPSEs identified as ‘sick’ for consideration outgo from Government or write-off of past of the BRPSE. BRPSE has made losses and infusion of fresh capital, etc. recommendation in respect of 28 CPSEs till Measures such as waiver of loan/interest/ 08.02.2006. penal interest, conversion of loan into equity, 19.7 Government has been extending need conversion of interest including penal interest based budgetary support to the PSEs from into loan, moratorium on payment of loan/ time to time in the form of Plan as well as interest, Government guarantee, etc. are also Non-Plan assistance, latter generally being for taken to improve financial strength of the sick and loss making enterprises. For profit company. making CPSEs the emphasis is on generation (ii) Business restructuring: Change of of more internal resources and lesser management, organizational restructuring, dependency on Government support. In line hiving off viable units from CPSEs for with the above policy, PSEs are enhancing formation of separate company, closure of their internal resources and only need based unviable units, formation of joint ventures by Budgetary support is provided. Enterprise- induction of partners capable of providing wise details of Plan and Non-Plan assistance technical, financial and marketing inputs, rendered by the Government to CPSEs is change in product mix, improving marketing given in Volume I of the Expenditure Budget strategy, etc. may be involved. of the Ministry of Finance. There are separate (iii) Manpower rationalization: through chapters on Internal Resource Generation of approved Voluntary Retirement CPSEs and disinvestments in this volume. Scheme(VRS). However, sick/loss making enterprises 19.6 Government has set up a Board for generally face the reluctance of the State Reconstruction of Public Sector Enterprises Governments and Financial Institutions to (BRPSE) to advise the Government on the come forward for/with concessions/reliefs or measures to be taken to restructure PSEs. support for working capital etc. The Board comprises a part- time Chairman, 19.8 As a result of revival efforts made by three part-time Non-Official Members and the BIFR, 3 CPSEs namely North Eastern three part-time Official Members including Regional Agricultural Marketing Corporation Secretary, Department of Public Enterprises Limited, Scooters India Limited and Vignyan as Member Secretary. The Board is serviced Industries Limited have been declared ‘No by DPE. For the purpose of making reference Longer Sick’ by the Board. In addition, Bharat to BRPSE, a company will be considered Immunologicals and Biologicals Corporation

160 Public Enterprises Survey 2004-05 : Vol.-I Limited and Maharashtra Elektrosmelt Limited under reference has not furnished information. have been dropped from the list of sick Thus, the net loss incurred by 57 operating industrial CPSEs by the BIFR on their sick industrial CPSEs as a whole was Rs. networth becoming positive. Cases of 3 7364 crore during 2004-05. Comparative CPSEs have been declared as ‘Non- position of operating sick industrial CPSEs vis maintainable’ by the Board as either the matter a vis all operating CPSEs in terms of had become time barred for reference to the accumulated losses, networth, loss of loss Board or the networth was found to be positive making CPSEs and number of employees as or was not fulfilling the condition of being on 31.3.2005 is given below: industrial company as defined in Industrial S. Particulars Amount Disputes Act or on some other grounds. No. (Rs. In crore) Status of the 73 sick industrial CPSEs 1. Total Loss of all loss 9003 registered with BIFR as on 30.6.2005 making CPSEs (Annexure) is given below:- 2. Total loss of loss making 7816 (i) Revival scheme sanctioned 16 sick industrial CPSEs

(ii) Draft Scheme circulated 2 3. Total no. of employees 16.93 in all CPSEs (in lakhs) (iii) Declared no longer sick 3 4. Total no. of employees 3.97 (iv) Dropped on networth becoming 2 in sick industrial CPSEs (v) Dismissed as non-maintainable 3 (in lakhs) positive 19.10 The process of revival/rehabilitation (vi) Winding up notice issued 2 through the BIFR has been very slow. A (vii) Winding up recommended 29 number of cases registered with BIFR are (viii) Failed and reopened 1 about 10 years old and the Board is yet to (ix) Under Inquiry take a final view in this regard. On an average, (Pending determination of sickness) 8 it takes about 6-7 years in arriving at any decision in BIFR process. In winding up of (x) Under Inquiry (Declared sick) 5 CPSEs the process of appointment of Official (xi) Remanded by Court/AAIFR 2 Liquidator (OL) is also slow and takes on an Total 73 average 4-5 years. The reasons for slow 19.9 Out of 73 CPSEs registered with process include restrictive definition of BIFR, 57 were in operation during 2004-05 and sickness, involvement of multiple agencies, 16 were closed till that period. The 39 of the delay in finalisation of revival schemes, lack 57 industrial sick loss making CPSEs had of funds, lack of adequate powers with BIFR, incurred a loss of Rs.7816 crore and 11 sick lack of proper monitoring of sanctioned revival profit making CPSEs earned a profit of Rs. schemes, delay in winding up of sick 452 crore during 2004-05. 7 of the 57 CPSEs companies, etc.

Revival and Restructuring of Sick/ Loss making CPSEs 161 Annexure STATUS REPORT OF CPSES REGISTERED WITH BIFR AS ON 30.6.2005

S. Case No. and year Name of CPSE Date of order No. of reference 1 2 3 4 A. Revival Scheme sanctioned 1. 518/1992 The British India Corpn. Ltd. @ 17.12.2002 2. 528/1992 Braithwaite & Co. Ltd. @ 17.10.1995 3. 533/1992 Bengal Chemicals & Pharmaceuticals Ltd. @ 31.3.1995 4. 534/1992 NTC (APKK& Mahe) Ltd. @ 7.2.2002 * 5. 535/1992 NTC (Gujarat) Ltd. @ 10.2.2002 6. 536/1992 NTC (Maharashtra North) Ltd. @ 1.10.2002 7. 501/1993 NTC (MP) Ltd. @ 12.2.2002 8. 503/1993 NTC (WB A B & O) Ltd. @ 15.2.2002 9. 504/1993 NTC (UP) Ltd. @ 5.2.2002 10. 505/1993 NTC (South Maharashtra) Ltd. @ 1.10.2002 11. 509/1993 Instrumentation Ltd. 23.12.1998 12. 501/1994 NTC (DPR) Ltd. @ 22.2.2002 13. 505/1994 The Indian Iron & Steel Co. Ltd. @ 20.11.2003 * 14. 507/1994 Hindustan Flurocarbons Ltd. 24.7.2003 15. 521/1992 Projects and Development India Ltd. 26.3.2004 * 16. 501/1998/501/2000 Eastern Coalfields Limited 2.11.2004 B. Winding Up Notice Issued 17. 501/1992 Bharat Pumps & Compressors Ltd. 15.11.2001 18. 501/1997 Hindustan Antibiotics Limited 4.9.2003 C. Winding up Recommended 19. 503/1992 Indian Drugs and Pharmaceuticals Ltd. 4.12.2003 20. 531/1992 National Instruments Ltd. 1.10.2002 21. 511/1992 Heavy Engineering Corpn. Ltd. 6.7.2004 22. 506/1993 National Jute Manufacturers Corporation Ltd. 8.7.2004 23. 503/1995 Hindustan Photofilms Mfg. Co. Ltd. 30.1.2003 24. 502/1999 Hindustan Vegetable Oils Corpn. Ltd. @ 7.12.2001 25. 507/1992 Triveni Structurals Ltd. 5.6.2003 26. 514/1992 Orissa Drugs & Chemicals Ltd. 8.4.2003 27. 532/1992 Bharat Ophthalmic Glass Ltd. 19.6.2003 28. 509/1992 Richardson & Crudass (1972) Ltd. @ 25.7.2003 29. 502/1992/601/1998 Nagaland Pulp & Paper Co. Ltd. 4.3.2002 30. 515/1992 Fertilizers Corpn. of India Ltd. 2.4.2004 31. 501/1999 Birds Jute and Exports Ltd. @ 24.6.2004 CPSEs recommended for winding up and have been closed 32. 526/1992 Bharat Brakes & Valves Ltd. @ 27.9.2002 33. 520/1992 Bharat Process and Mechanical Engineers Ltd. @ 22.7.1996 34. 508/1992 Cycle Corporation of India Limited @ 10.7.2000 35. 510/1992 Mining and Allied Machinery Corporation Ltd. 29.6.2001 36. 513/1992 National Bicycle Corporation of India Ltd. @ 20.12.1993 37. 506/1994 Rayrolle Burn Ltd. @ 13.7.2001 38. 506/1992 Tannery and Footwear Corporation of India Ltd. 14.2.1995 39. 524/1992 Weighbird India Limited @ 17.2.1997 40. 504/1994 Southern Pesticides Corporation Limited 1.11.2001 41. 505/1992 Bharat Gold Mines Ltd. 12.6.2000

162 Public Enterprises Survey 2004-05 : Vol.-I 1 2 3 4 42. 519/1992 The Elgin Mills Co. Ltd. @ 30.9.1994 43. 527/1992 Cawnpore Textiles Ltd. @ 19.1.1995 44. 538/1992 Bengal Immunity Limited @ 25.2.2003 45. 502/1996 Maharashtra Antibiotics & Pharma. Ltd. 4.7.2000 46. 529/1992 Smith Stanistreet & Pharmaceuticals Ltd. @ 3.12.2001 47. 503/1999 Pyrites, Phosphates & Chemicals Ltd. 20.11.2002 D. Dismissed as Non-maintainable 48. 504/1997 Manipur State Drugs & Pharmaceuticals Ltd. $$ 17.11.1997 49. 502/2002 Central Coalfields Ltd. 29.11.2002* 50. 517/1992/504/2002 Biecco Lawrie Limited @ 27.3.2003 * E. Draft Scheme Circulated 51. 523/1992 Tyre Corporation of India Ltd. @ 20.2.1997 52. 502/2000 Hindustan Salts Limited 16.9.2003 * F. Under Inquiry (Pending determination of sickness) 53. 501/2003 Andrew Yule and Company Ltd. @ - 54. 502/1998 NEPA Ltd. - 55. 501/2004 Hindustan Insecticides Ltd. - 56. 502/2004 NTC(TN & Pond.) Ltd. @ - 57. 503/2004 Bharat Heavy Plates and Vessels Limited - 58. 504/2004 ITI Limited - 59. 505/2004 Tungabhadra Steel Products Limited - 60. 501/2005 Hindustan Organic Chemicals Limited - * G. Declared sick 61. 501/1996 Cement Corporation of India Ltd. 8.8.1996 62. 504/1998 Praga Tools Ltd. @ 10.5.1999 63. 501/2001 Bharat Wagon & Engg. Co. Limited @ 11.2.2004 64. 504/1995/502/2001 Bharat Coking Coal Ltd. 11.2.2004 65. 503/505/2002 Hindustan Cables Ltd. 21.3.2003 H. Declared no longer Sick 66. 504/1992 Scooters India Ltd. 1.7.2000 * 67. 503/1997 North Eastern Regional Agri. Marktg. Corpn. 20.8.2001 68. 512/1992 Vignyan Industries Ltd. 27.5.2003 * I. Dropped (N/W positive) 69. 502/1997/503/1998 Bharat Immunologicals & Biologicals Corporation Limited 1.8.2002 * 70. 501/2002/502/2003 Maharashtra Elektrosmelt Ltd. 27.6.2005* J. Failed & Reopened 71. 508/1994 Burn Standard Co. Ltd. @ 14.9.2001 K. Remanded by AAIFR 72. 516/1992 Hindustan Fertilizer Corpn. Ltd. 1.12.2002 L. Remanded by Court 73. 525/1992 Bharat Refractories Ltd. @ 13.1.2004 @ Taken over PSEs (33) * Profit making as on 31.3.2005 (11) $$ Since closed Note : Since Mandya National Paper Mills Limited has been wound up, Jessop & Co. Ltd. has been privatized and U.P. Drugs and Pharmaceuticals Limited has been transferred to the U.P. Government, these have not been included in the lis

Revival and Restructuring of Sick/ Loss making CPSEs 163