Concerted efforts on to turn around loss-making PSUs
THIRUVANANTHAPURAM: The masala bond debate in the Kerala Assembly recently may have prompted the Finance Minister Dr Thomas Isaac to do a professorial speech on neoliberalism versus Keynesianism; but the Kerala Government seems to have made up its mind to step back from future industrial projects and to play a minor role on equity participation.
The thinking had started about 25 years ago when the theme for Cochin International Airport Ltd (CIAL) was mooted as a public-private partnership (PPP) with the government holding a minority stake.
Thereafter, Kannur International Airport Ltd (KIAL) has also been established on the PPP lines with the Government owning 35 per cent in the project.
It’s not yet known how much would Government hold in the ambitious Titanium Project coming up in Chavara at a cost in excess of Rs3000 crore as per an earlier estimate. Though the project has progressed well with the detailed project report (DPR) having been prepared, of late it’s heard that the DPR would undergo a tweaking and may get delayed a little more.
The Kerala Government has decided to hold a minority stake in the three new projects announced by the government – aimed at uplifting farmers in the areas of coffee, rubber and rice that have made headlines in the recent past.
Talking to businessbenchmark.news recently, the chairman of Public Sector Undertakings Restructuring and Internal Audit Board (RIAB), N Sasidharan Nair, said the government has decided to limit its equity participation to only 26 per cent in these ambitious projects.
The rice cluster project that was announced in the budget seeks to establish rice parks in Palakkad, Thrissur and Alappuzha with an aim to improve the lives of paddy farmers. An investment of Rs20 crore has already been allocated in the budget and the project will see farmers becoming equity partners in this endeavour.
“For this, the value of their land set aside for the project can be valued as farmers’ equity in the project. Government has already appointed special officer to take the project forward,” Nair said.
Another project in the series is the innovative Industrial Park for the manufacture of rubber products that was announced by the Finance Minister Dr Thomas Isaac while presenting the state Budget for 2019-20.
The idea is to register a company for this purpose soon on a PPP model with the Government ownership being kept at 26 per cent. A detailed project report has been prepared by Kerala State Industrial Development Corporation (KSIDC). This project will also see several rubber growers part-taking as equity holders.
A project to cash in on the ‘aroma’ and flavour of ‘Malabar Coffee’, processed from carbon-neutral Wayanad plantations has always been close to the finance minister’s heart.
He has time and again talked about his dream to produce a globally branded coffee from his own state.
The Rs150-crore project where the Government will likely hold 26 per cent stake, seeks to categorise coffee plantations on the basis of climatic conditions and scientifically improve the quality of beans grown there.
The coffee thus processed at the carbon-neutral Wayanad will be branded as Malabar Coffee. The minister hopes to raise Malabar Coffee with all features of a corporate brand and he is confident that this will help earn the farmers better pricing with a premium in the range of 25 to 100 per cent over other comparable brands.
Gone are the days when the Government floats public sector companies with 100 per cent equity participation and keeps them running with the sole aim of providing employment and in the process accumulating losses year after year pushing the state into a debt spiral.
Cochin International Airport Ltd (CIAL), one of the first successful private public partnership (PPP) projects in the state where the state owns only 32 per cent ownership, has been the harbinger of change in the right direction and has been making history by reporting profits year after year without a break.
Though the PSUs are an underbelly of the finances of the state, the RIAB chairman said there are schemes contemplated to improve the PSUs’ bottom line by integrating the functioning of similar companies, thus helping prune costs on the one hand and at the same time boosting their operational efficiency.
To a question whether the state would move towards closure or privatisation of any of the loss-making PSU units, Nair ruled out both and exuded confidence that it is not long before these companies would turn profitable. “The state of many companies has improved substantially and several of these loss-making units are not incurring cash losses currently,” he added.