The Centre is considering the closure of nine ailing central public sector enterprises (CPSEs) including National Textile Corporation (NTC) along with its 5 subsidiaries, State Trading Corporation of India (STC), PEC Ltd and British India Corporation Ltd (BIC).
A draft Cabinet note on this matter is being discussed, within the government, sources said, adding that it is currently under the consideration of the prime minister’s office (PMO).
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In 2021, the Centre unveiled the PSE policy which entailed that the government maintains a minimum presence in the four broad strategic sectors identified while the remaining ones can be privatised, merged or closed.
Due to obsolete technology, unavailability of working capital and other financial constraints, operations in most of the NTC mill units have been under suspension for several years. To protect the interest and welfare of employees, they are being paid wages and statutory dues as per mutual agreement between the management and representing workers of the mill. In FY21, the latest year for which financials were available, the company reported a net loss of Rs 344 crore.
During FY24, trading firm STC did not undertake any business activities. The company reported a net profit of Rs 52.21 crore, thanks to rental income. However, it has a negative net worth of Rs 955 crore and accumulated losses of Rs 1083 crore. Furthermore, the accounts of the Company remain classified as NPA.
Another trading firm PEC has also not carried out any business activity since September 2019. It reported a net loss of Rs 340 crore in FY24, largely attributed to the interest payable to lender banks.
Textile firm British India Corporation operates two woollen mills, one at the Cawnpore Woollen Mills (Lalimli) in Kanpur and the other at the New Egerton Woollen Mills in Dhariwal, Punjab. The staff were being paid for from the budget in recent years, due to poor finances of the firm.
The ailing firms are a drag on the exchequer as the Centre has to pay the salary and other liabilities even if they have not carried out any business for years.
As per the PSE policy, in the non-strategic sector, all CPSEs will be privatised or closed in case privatisation is impossible.
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