The industrial sector has continued to grow in keeping with the tempo of growth since March, 1999. The overall growth in the general index of industrial production was 6.2% during April – December, 1999 compared to 3.7% during the corresponding period last year. Production achievements and growth rate in some of the industries being dealt by the Deptt. during the period April ‘99 – Dec. 99 as compared to April ‘98 – Dec. ’98 is given below :

The policy regime in respect of the infrastructure sector has been further liberalised and made investor-friendly. Some of the initiatives taken for the growth of this sector include setting up of Infrastructure Development and Finance Corporation, relaxation of norms for ECBs, automatic approval of FDI and reduction in income tax and custom duty rates etc. Development and Growth of infrastructure projects will spur the demand for engineering and capital goods etc. and contribute to the overall growth of the economy.

The present trend in industrial production is likely to be maintained because of better support from the infrastructure sector, macro-economic policies, and removal of barriers to trade.

The PSEs under the Department are engaged in manufacturing, consultancy and contracting activities. Out of 48 PSEs, 16 made profits in 1998-99 and remaining 32 made losses. The aggregate performance of 48 PSEs has been as under :

(Rs.cr.)

The loss is attributed to shortfall in production of some major enterprises, shortage of working capital, surplus manpower, obsolete plant and machinery, besides increase in the cost of inputs etc.

Details of production, profit/loss, order book and Exports are given in Annexure – III, IV, VI & VII.

Salary/Wage bill and social overheads as percentage of turnover is given at Annexure – V. Value added per employee and value added per rupee of wage paid are indicated at Annexure – VIII.

The status of the 26 PSEs referred to BIFR is as under :

* Posted profits in 1998-99.

Following strategies for restructuring of PSEs under the Department of Heavy Industry are in hand :

• Revival of PSEs through the BIFR;
• Financial restructuring wherever appropriate;
• Joint Venture formation to have continuous access to technology, market, finance, Management etc.;
• Manpower rationalisation;
• Strengthening of Boards/Management.

Keeping in view the above strategies, action points have been worked out for individual companies which broadly fall under the following categories :

1. Profit making PSEs;
2. Sick PSEs having revival plans sanctioned by BIFR;
3. Non-revivable sick PSEs;
4. Other loss making PSEs.

1. Profit making PSEs

There are sixteen PSEs of the Department which posted profits in 1998-99. This includes three sick PSEs for which revival plans sanctioned by BIFR are under implementation. Among the profit making companies, BHEL is a major profit earner which has been notified as Navratna. The profit making PSEs are proposed to be strengthened by various measures including technology upgradation and marketing skills.

2. Sick PSEs having revival plan sanctioned by BIFR

12 such PSEs have got revival schemes sanctioned by BIFR involving infusion of funds to the extent of Rs.619 cr. and financial restructuring of Rs.2228 cr. Implementation of these revival plans is being monitored closely by the Department. Three of these PSEs have shown profit in 1998-99.

3. Non-revivable sick PSEs

There are seven PSEs which have been finally considered unviable at one stage or the other by BIFR after exploring all avenues of revival. In one case, Disinvestment Commission itself has expressed the view regarding unviability of the Company.

With a view to mitigating the hardship of employees and to obviate the need for payment of idle wages, Govt. have decided to introduce a Voluntary Separation Scheme by extending benefits of VRS to employees in the unviable PSEs.

The benefits of VRS extended to employees under these schemes are substantially higher than payments under I.D.Act in the eventuality of winding up. 6047 employees out of 11,244 employees in such PSEs have availed of the scheme.

4. Other loss making PSEs

Three loss making PSEs namely, Mandya National Paper Mills (MNPM), Tyre Corporation of India Ltd. (TCIL) and Hindustan Photo Films Ltd. (HPF) are under reference to BIFR and are awaiting decision. In respect of other PSEs, restructuring plans are under preparation/finalisation by the PSEs/Deptt. Efforts to improve the performance of these companies continue through manpower rationalisation, cost reduction, rationalisation of product mix, balancing equipment for debottelnecking and renewals and replacement of plant and machinery.

BHEL is one of the Navratnas. The Board of the Company has been strengthened by induction of qualified professionals from outside. Greater freedom has been given in respect of capital expenditure, formation of strategic alliances and formulation of HRD policies.

Voluntary Retirement Scheme (VRS) has been introduced in a number of PSEs of this Department to shed surplus manpower without causing undue hardship to the workers. About 37,000 employees opted for VRS during the six year period 1992-93 to 1998-99 involving an expenditure of about Rs.700 crores.

With a view to giving greater autonomy to the public sector enterprises and at the same time making them accountable for achievement of their objectives, the concept of MOU has been accepted and implemented by the Government. For the year 1999-2000, 8 PSEs namely, Bharat Heavy Electricals Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam Ltd., Hindustan Cables Ltd., Andrew Yule & Company Ltd., Engineering Projects (India) Ltd., HMT Ltd. and Hindustan Paper Corpn. Ltd. signed MOU with the Govt. of India.