PSUs kept headless to reduce value?

NEW DELHI, MAY 1: Normally, you'd expect that when a public sector unit (PSU) has to be sold, the government would try and turn it around,...

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NEW DELHI, MAY 1: Normally, you’d expect that when a public sector unit (PSU) has to be sold, the government would try and turn it around, or at least cut its losses a bit. Except, call it plain dereliction of duty if you will, but the way the government has been behaving over the past few years, its actions have actually resulted in the PSUs going further in the red.

Take the case of the country’s largest hotel chain, ITDC, which valuers have estimated is worth around Rs 1,500 crore with its 26 hotels across the country and its lucrative duty-free shops. While other hotel chains were probably churning out a lot more profit from their assets, in 1997-98, ITDC still managed to earn a profit of Rs 27.38 crore from its hotels division. Today, after 30 months of not having a full-time head, this is down to a loss of Rs 13.7 crore in 1998-99, and further to an all-time low of a loss of Rs 39.61 crore in 1999-00.

ITDC has kept around 5 posts of vice-presidents vacant for over two years and when its last full-time chief Anil Bhandari finished his term, its director finance, Suresh Chatwal, was asked to officiate. Chatwal has no experience in running a hotel, and that’s probably why he was not given full charge, but was given an extension every three months, for over a year. And when Chatwal finally retired two months ago, ITDC’s charge was given to a joint secretary, instead of appointing a full-time chief.

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A similar story has been repeated in the case of the Hotel Corporation of India which is now up for sale.

Interestingly, two years ago, the tourism ministry had come up with a proposal that it should be made mandatory for government officials and ministers to stay in the ITDC hotels whenever government pays this is still gathering dust. No decision is taken to counter the 50 per cent discounting done by private hoteliers due to slump in the tourist traffic. Obviously, indecision helps in keeping ITDC sick.

Similarly, no decision has been taken for well over 18 months on new aircraft for Air India the problem, however, that Air India cannot fly more unless it has more aircraft. And now, after the fiasco, and the CBI enquiry over the wet-leasing of the Caribjet deal, a new committee has been set up to see if AI can dry-lease the aircraft instead. More delays!

The other national carrier, Indian Airlines, is in a similar state of flux, with the government yet to decide who should head it when the present chief, an IAS official on deputation, remits charge soon it’s still unclear as to whether another bureaucrat will be asked to head it as an additional charge, or whether a company insider will get to head it, or whether a search committee will look for an outsider.

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IPCL, which witnessed a great controversy over its sale, is now without a managing director for over six months two months ago, a candidate was appointed by the Appointments Committee of the Cabinet, but the chemicals minister Suresh Prabhu put his foot down. With no appointment, a joint secretary was asked to look after the prestigious petrochemicals unit. Sources say that there are as many as 15 PSUs which are facing such situations.