Govt to review cap on NavRatna, MahaRatna: Patel

New Delhi, Dec 16 (IBNS) lThe government is considering review of cap on NavRatna and MahaRatna PSUs and a concrete proposal in this regard is likely to be put up to the cabinet, said Praful Patel on Friday.

He was speaking at the ASSOCHAM conference on Public Sector Enterprises held in New Delhi on Friday.

This, he said has been necessitated in view of fluctuations in the currencies and need for PSUs to adopt new strategies to acquire assets overseas and leverage their huge intrinsic assets while continuing to fulfill their socio-economic obligations.

"PSEs have been an integral part of the economy in its growth and development process. They will continue to focus on what role they may be required to play in future as well," said the minister.

Despite a fast-growing private sector, said Patel, the role of PSEs cannot be undermined as the Indian economy integrates with the global marketplace and the resultant challenges.

"They should look at acquiring more assets abroad in future. However, to take PSEs to the next phase of growth, competitiveness and sustainability will be key driver for corporate transformation."

The minister said PSE managements must be strengthened so that they have flexibility to take radical decisions rather than take comfort in safety zones. This is essential in present difficult economic conditions globally and currency fluctuations.

S. Sundareshan, secretary at the Department of Heavy Industries, said PSEs should capitalise on their intrinsic assets to unlock values by forging joint ventures with other PSEs and expand with a new vision, direction and dynamism.

He said the government will strive to revive as many financially sick PSEs, rather than close them.

M.H. Khan, secretary at the Department of Disinvestment, said the 1991 economic liberalisation process compelled all PSEs to compete in a free market economy and their transformation is still rolling out.

He said PSEs must participate more vigorously in capital markets to leverage cash balances and sustain shareholders' value.

Meanwhile, ASSOCHAM president Dilip Modi said the aggregate income of 106 central PSEs totals Rs 15,085 billion or 24.6 per cent of India's GDP at current market prices. PSEs have also played a vital role in financial markets as evident from the total market capitalisation of Rs 19.84 trillion.

"Business process re-engineering - especially in global best practices like total quality management for customer satisfaction - are essential for them to compete efficiently with others in liberalised markets."

Modi said acquiring the latest technology and its effective use will be the key to control costs and ensure high productivity.

"Global challenges today compel us to consolidate our competencies and identify right markets for diversifying. It is essential to enter into strategic alliances in production and through public private partnership in emerging areas."

S.K. Roongta, chairman of ASSOCHAM National Council on Public Sector Enterprises, said PSEs are major employment generators and employ 1.5 million people.

The private sector and PSEs could explore win-win partnerships while many countries are galloping with partnerships in new and emerging gas-rich countries of Africa and West Asia.

They should focus more on strategy moves rather than operation orientation, he said.

B.B. Singh, director of personnel department at SAIL, said PSES were set up for self-reliant economic growth and have followed the path of inclusive development with sustainable environmental practices.

However, they now face new challenges of corporate governance, audit compliances and bureaucratic red-tapism.

A.K. Purwaha, chairman and managing director of Engineers India Limited, said PSEs should re-mould business models to become lean and profitable. There is need for them to invest more in research and development, and develop a culture of innovation to face current dynamic business environment.

"New and innovative business models will enable PSEs to focus on their core competencies," he said.

K.C. Mehra, ASSOCHAM senior managing committee member, said PSEs have been a strategic lever for India's economic development in pre-Independence and post-Independence eras. The number of CPEs last year was 249 with investments of Rs 5.8 lakh crore.

Foreign earnings by PSEs in 2009-10 were to the tune of Rs 78,000 crore and their contributions to central exchequer were Rs 1.4 lakh crore.