BIFR fires a salvo, wants to be the sole authority for PSUs under it

BIFR fires a salvo, wants to be the sole authority for PSUs under it
Nandita Roy

New Delhi, September 19: Efforts at disinvesting government stake in sick Public Sector Undertakings (PSUs) has hit yet another roadblock. This time it is the Board for Industrial and Financial Reconstruction (BIFR) which has put a spoke in the wheel.

BIFR has contended that being a quasi judicial body, it has the sole perogative to find or recommend joint venture partners for all sick PSUs referred to it for rehabilitation.

To make matters worse, the BIFR has already put its foot down in the case of Jessop & Co and said that the government has no right to seek a JV partner as the company has already been referred to the Board. According to the Sick Industrial Companies Act (SICA), a company is under BIFR till its net worth becomes positive.

However, if the BIFR's directive is taken to its logical conclusion and the DOD prevented from finding partners for these sick PSUs, disinvestment process in at least 12 sick PSUs under the Department of Heavy Industries would be in jeopardy. Out of 48 PSUs under Heavy Industries Ministry, 24 are slated for joint venture partners, of which nearly 12 are under BIFRWhat is more in the case of sick companies like Jessop & Co, Nepa Ltd and Instrumentation Ltd., Kota the DOD has already initiated the process of disinvestment by announcing advisors for strategic sale. Earlier, all BIFR packages for these PSUs had failed to rehabilitate them back to sound financial health.

BIFR's stubbornness is being seen as a clear case of ego clash between various arms of the government. Official sources say if the BIFR is allowed to have its way it would put the disinvestment process in a number of sick state-owned companies on the backburner. To avoid such a consequence, the government itself is expected to approach the higher authority -- theApellate Authority for Industrial & Financial Reconstruction (AAIFR) in order to restrain BIFR. All disputes arising out of the BIFR verdict can be appealed before the AAIFR for redressal.

``The government has given DOD the authority to find joint venture partners for PSUs earmarked for disinvestment. And after identifying partners the government would in any case inform the BIFR. So BIFR's approach is an unnecessary delaying tactic,'' official sources said.

At present, 26 PSUs from DHI stand referred to BIFR. Out of which BIFR has sanctioned revival schemes in case of 12 PSUs. Three out of these 12 12 posted profits in 1998-99.