ROLE AND FUNCTIONS
The Department of Heavy Industry administers 48 operating Public Sector Enterprises (PSE's) including 7 constancy/contracting units. (These include 19 enterprises which were taken over from private sector.) The total investment in these 48 enterprises was about Rs. 7339 Crs. till March, 1998, and they employed about 1.84 Lakh persons. (Ann - I&II). This Department also looks after the investment of the Government in Maruti Udyog Ltd., an automobile company. These enterprises operate in diverse fields ranging from sophisticated engineering sectors to consumer goods and offer a wide variety of products such as machine tools, industrial machinery, boilers, gas/steam/hydroturbines, turbo generators, railway traction equipments, pressure vessels, AC locomotives, prime movers, electrical equipment, agricultural and earth moving equipment, scientific and industrial instruments, Defence equipment and consumer goods like bicycles, shoes and salt. The Department assist PSEs in their effort to:
There is close interaction with PSEs which enables the Department to monitor their overall performance. The Department also serves as an interface between these enterprises and other agencies of the Government to establish long term linkages with the user sector for formulating and modifying corporate policies, improving the order book position and maintaining supplies to different core sector customers.
The Department encourages restructuring of these companies to make their operations competitive and viable on a long term and sustainable basis, including formation of Joint Ventures (JVs) in appropriate cases with suitable partners to facilitate continuous access to technology and market. A separate budget provision has been made for engaging reputed consultants for advising on corporate restructuring, including locating JV partners, wherever required. The Department arranges Plan and Non-plan budgetary support for the PSEs in consultation with Ministry of Finance and Planning Commission. A separate head of "Crucial Balancing Investment" has been created in the Department's budget to give flexibility to meet unanticipated debottlenecking or other urgent requirements of these PSEs arising during the year with a view to responding to market demands. Consultancy studies aimed at identifying and removal of constraints are also funded by the Department. Under the amended provision of the Sick Industrial Companies Act (SICA), sick PSEs of the Department are referred to the Board for Industrial and Financial reconstruction (BIFR). This Department interacts with BIFR and other concerned agencies for formulation of revival packages.
Long term strategies of growth of PSEs are pursued through the mechanism of Five Year and Annual Plans which are finalised in consultation with the Planning Commission.
The Department of Heavy Industry is headed by a Secretary to the Government of India who is assisted by a team of officers and staff of overall strength of 216. The Department is also supported by the Economic Adviser and the Integrated Finance Wing under the Additional Secretary & Financial Adviser of the Ministry of Industry.
The over-all performance and re-structuring strategies etc. for the PSEs of the department are as under:-
Performance OF PSEs
The enterprises with the Department are likely to end the year 1998-99 with an outturn of about Rs.12420 cr. which would be 9% higher than the outturn of Rs. 11344 crores achieved by them during 1997-98. Details are at Annexure-III.
Financial Performance
The aggregate provisional net loss by these PSEs is anticipated at Rs.440 crs. during 1998-99 against a net loss of Rs.183 crs. in 1997-98. Details are at Annexure - IV. The major loss making units are: Heavy Engineering Corporation Ltd.; Mining and Allied Machinery Corporation Ltd.; Rehabilitation Industries Corpn.; Engineering Projects (India) Ltd.; Tannery & Footwear Corpn.; Tyre Corporation of India Ltd.; Cycle Corporation of India Ltd.; National Bicycle Corporation of India Ltd.; Hindustan Cables Ltd.; Hindustan Photofilms Ltd.; Bharat Ophthalmic Glass Ltd. and HMT Ltd. The main reasons for the overall loss were shortfall in production of some major enterprises due to shortage of working capital, surplus manpower, obsolete plant and machinery, besides increase in the cost of inputs.
The aggregate order book as on October 1, 1998 was about Rs.12,246 cr. (Ann - VI). Salary/Wage bill and social overheads as percentage of turnover is given at Ann - V. Value added per employee and value added per rupee of wage paid are indicated at Ann - VIII.
Reference to BIFR
Twenty-Three PSEs of this Department, stand referred to BIFR. Out of 23 PSEs, BIFR have sanctioned revival schemes in case of 10 PSEs. 5 PSEs out of these 10 turned around and posted profits in 1997-98.
Status of the 23 PSEs referred to BIFR is as under:
Cases where BIFR has : 10
Sanctioned scheme for revival
Cases where BIFR at one : 9
stage or the other reached at the conclusion that company was non-viable and expressed preliminary/final view regarding winding up.
(i) National Bicycle Corpn.of India Ltd.
(ii) Tannery & Footwear Corpn. of India Ltd.
(vi) Cycle Corpn.of India Ltd.
(vii) National Instruments Ltd.
Under process : 4
(i) Hindustan Photo Films Mfg.Co. Ltd.
(ii) Burn Standard Co.Ltd.
(iii) Tyre Corpn. of India Ltd.
(iv) Cement Corpn. of India Ltd.
* Posted profits in 1997-98.
Strategies for Restructuring of the PSEs of the Department
National agenda of the Government lays stress on comprehensive reforms of PSEs including restructuring, rehabilitation and divestment. In tune with this, following strategies for restructuring of PSEs under the Department of Heavy Industry are in hand:
- Revival of PSEs through the process of BIFR
- Financial restructuring wherever appropriate
market, finance, Management etc.
- Manpower rationalisation.
- Strengthening of Boards/Management.
ACTION PLAN FOR RESTRUCTURING OF PSEs UNDER DHI
Keeping in view the above strategies, action point have been worked out for the individual companies which broadly fall under the following categories :
Profit Making PSEs,
Sick PSEs having revival plan sanctioned by BIFR
Non-revivable sick PSEs,
Other loss making PSEs
The action plan aims at strengthening viable PSEs for their long-term growth. In case of unviable PSEs, Govt. is providing financial support for separation benefits to employees.
(i) Profit making PSEs
There are nineteen PSEs of the Department which posted profits in 1997-98. This includes five sick PSEs which turned around in 1997-98 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 Navaratna. It is proposed to strengthen BHEL by making it internationally competitive with R&D efforts and technology improvements, adopting TQM and making efforts to syndicate suitable financial packages. Remaining PSEs are marginally profit making which are proposed to be strengthened by inducting join-venture partner for technology upgradation and infusion of fresh investment and marketing, wherever appropriate. Diversification and cost reduction measures are also planned in some of the companies for improving their profitability.
(ii) Sick PSEs having revival plan sanctioned by BIFR
Ten such PSEs have got sanctioned revival schemes by BIFR which involve fresh infusion of funds to the extent of Rs.466 cr. and financial restructuring of Rs.1597 cr. These revival plans which are under implementation are being monitored closely by the Deptt. Five of these PSE's have shown profit in 1997-98. In the long run even for these PSEs, JV formation for some of the PSEs shall also be explored at appropriate stage in the interest of their long-term viability.
(iii) Non-revivable sick PSEs and voluntary separation scheme
There are eight PSEs which have been considered unviable at one stage or the other by BIFR after all possible avenues of revival including change of promoter, formation of workers co-operative etc. have been explored in one case this investment commission has expressed the view regarding unviability of the company with a view to mitigating the hardship of employees and to aviate the need for payment of idle wages, Government have recently taken a decision to introduce voluntary separation scheme by entering benefit of VRS to employees in the unviable PSEs. Statutory dues alongwith VRS benefits are also to be paid. Employees of these PSEs were not getting VRS benefits prior to the said decision. The benefits of VRS now extended to employees are substantially higher than payments under I.D. Act in the eventuality of winding up. Ex-gratia equal to 45 days of pay for each completed year of service is being made available to the employees along with all their entitlements towards statutory dues, whereas compensation under the winding up provision will be as per the Industrial Disputes Act, which will be 15 days of pay for each completed year of service.
(iv) Other loss making PSEs
Four loss making PSUs namely, BSCL, MNPM, TCIL and HPF are under reference to BIFR and their revival plans are awaiting BIFR's recommendations. In respect of other PSUs, restructuring plans are under preparation/finalisation by the PSUs/Deptt. Efforts to improve performance of these companies continue through manpower rationalisation, cost reduction, rationalisation of product mix, balancing equipment for debottlenecking and renewal and replacement of plant and machinery.
Exports
PSEs of this Department, particularly in the engineering sector, have been putting renewed efforts in the export market. A conscious effort is being made by these undertakings to reach international levels of competitiveness through improved production and marketing, technology upgradation and better quality. Exports including deemed exports for all PSEs of the Department, stood at Rs.1995 crore in 1997-98.(Ann-VII).
Autonomy to PSEs/Navratnas and Miniratnas
In an effort to give greater autonomy, BHEL has been identified as one of the Navratna category of PSEs. The Board of the Company has been strengthened by induction of qualified professionals from outside and greater freedom has been given in respect of capital expenditure, formation of strategic alliances and formulation of HRD policies.
Voluntry Retirement Scheme (VRS)
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 35,000 employees opted for VRS during the six year period 1992-93 to 1997-98 involving an expenditure of Rs. 600 crores.
Memorandum of understanding (MOU)
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 1998-99, nine PSEs namely Bharat Heavy Electricals Ltd., Bharat Bhari Udyog Nigam Ltd., Bharat Yantra Nigam Ltd., Hindustan Cables Ltd., Andrew Yule & Company Ltd., Engineering Projects (I) Ltd., National Industrial Development Corporation, HMT Ltd. and Hindustan Paper Corpn. Ltd. signed MOU with the Govt. of India.
CITIZEN'S CHARTER
Department of Heavy Industry has 48 Public Sector Undertakings under its Administrative Control. The commercial activities of Public Sector Undertakings are governed by the Companies Act and the rules framed thereunder as also the guidelines laid down by the Department of Public Enterprises.
The Department is committed to the goal of effective and responsive administration for which following steps have been taken :
(i) Computerised Information and Facilitation Counter has been set up in the Department for providing necessary information to the general public in respect of the Department.
(ii) In an effort to streamline the system of redressal of public grievances, a Joint Secretary in this department is already functioning as Joint Secretary (Admn. & Public Grievances) in order to ensure that the grievances are redressed in time.