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What the longevity of British India Corporation tells us about government lethargy

Some facts are stranger than fiction, especially when they are about zombie PSUs.

January 25, 2021 / 09:12 AM IST

Shortly after independence, Jawaharlal Nehru had a dream, a vision taken to near delirium by his daughter, Indira Gandhi.

They dreamt that, in free India, we would get our food from the Food Corporation of India, the food grown with fertilizer from the Fertilizer Corporation of India, stored in the godowns of the Food Corporation of India and seasoned with salt from Hindustan Salt. We, the citizens of this brave new India, would ride to work on bicycles made by the Cycle Corporation of India, or on scooters from Scooters India.

We would bank with the State Bank of India or the nationalised banks, write on paper from Hindustan Paper, read newspapers printed with newsprint from Hindustan Newsprint, light up our homes---made with cement from the Cement Corporation of India-- with electricity supplied by NTPC, using coal from Coal India. If we fell ill, we would use medicines from Bengal Chemicals and Pharmaceuticals and Hindustan Antibiotics. We would fly Air India from airports owned by the Airports Authority of India.

We would wear clothes made by the National Textile Corporation, shoes from Bharat Leather Corporation and stay at hotels run by state-owned companies such as the Ranchi Ashok Bihar Hotel Corporation Ltd and watch movies on film produced by Hindustan Photo Films Manufacturing Company Ltd, while All India Radio would bring us the news about the great deeds of all these public sector units. They even had a Rehabilitation Industries Corporation, although the nationalised banks anyway performed that function.

Unfortunately, that dream has turned into a nightmare, with the Public Enterprises survey of 2018-19 showing there were 70 loss-making central PSUs, with total losses of Rs31,635 crore that year alone.


Nehru’s dream may well have been the result of smoking substances supplied by Joe Stalin and his comrades.

Why did the vision go sour? Take Scooters India, which the government has said it will shut down. Its website says they stopped making scooters in 1997 and ventured into three-wheelers instead. Why the shift? In the ‘Future’ segment of the website, they say, “Past is dead and gone, we are standing on the threshold of today, planning for the future. In the process, we added one wheel, shifting the gear from two wheeler to three wheeler and proposed to add another, entering in to the arena of four wheeler.”

Progress, the company clearly believes, lies in adding more wheels. If only the government had not rudely yanked the ground from underneath their wheels, in ten years’ time they would probably be churning out ten- or even twenty-wheelers.

Of course, Scooters India employees seem to have done rather well despite the losses-- the latest annual report says the median remuneration went up 44.3 percent in 2019-20.

Whatever may be the reason for things going pear-shaped, it wasn’t for lack of vision. Sample this from the Scooters India website: ‘Growing into a global company is not only a goal but has become a necessity as the world has turned into a global village without boundaries.’ STC’s annual report says its vision is ‘to be a leading world class trading organization…’ Unfortunately, the report goes on to say, ‘in view of the financial crisis being faced by STC, the Company continued to refrain from undertaking trade involving STC’s funds/banking limits.’

Look at MTNL’s vision: ‘Become a global telecom company and to find a place in the Fortune 500 companies.’ Consider the National Textile Corporation’s mystifying mission: ‘a legacy of consistency...crusading a global vision’. Could it be hubris that knocked them down?

The government has helped, of course. PEC Ltd chairman’s statement says, “A lot of what we have achieved would not have been possible without the policy support and facilitating approach of the Government.”

The company had a sales turnover of Rs 617 crore with a net loss of Rs 499 crore during FY 2018-19.

So did the employees. BSNL’s annual report candidly says, "Employee cost of the Company is nearly 80 percent of income from services as compared to other telcos, where the same is 3 percent to 5 percent of revenue."

Brahmaputra Valley Fertiliser Corporation Ltd’s welfare activities include one sixty bedded hospital, seven schools, one open stadium, one indoor stadium, one daily market and two recreational clubs. Judging such companies on crass commercial principles would be blasphemy.

The public enterprises survey has a chart showing the number of employees in central PSUs with the number of houses constructed for them. The Brahmaputra Valley Fertilizer Corporation, for instance, has 595 employees, but 2799 houses constructed. The employees probably shift houses periodically to admire a new view. NHDC Ltd has 540 employees, but 2025 houses. The survey says HMT Ltd has 101 employees, but 1112 houses. As the houses fell down, the employees shifted to other ones.

Some facts are stranger than fiction. We have all heard the stories of Hindustan Fertilizer’s Haldia plant, which didn’t produce a single bag of fertilizer for years. The less said about the state PSUs, the better. A 2017 CAG report on Bihar state PSUs said that ‘Only 18 PSUs finalised their accounts in the last three years, and 65 PSUs had arrears in accounts ranging from 1977-78 onwards.’

Of course, there have also been some triumphs. Take Sambhar Salts, a PSU company that achieved a loss of Rs 10.83 crore on a turnover of Rs 19.03 crore in 2018-19, whose vision was to ‘be a dominating player in salt industry and allied products’.

The company’s annual report informs us it won 3rd prize in the Rasoi-2019 food festival organised by the Industries department, Government of Rajasthan. Or consider the case of Orissa Mineral Development Company. The lease rights of all its six mines have expired, but its annual report believes in the power of positive thinking and says it ‘has taken positive steps to enhance awareness and usage of Hindi among employees.’

But, perhaps, what best sums up the problem is British India Corporation. A report last August said the Textile Ministry has taken a final decision to shut down this loss-making hundred year old textile manufacturer in Kanpur, sorry Cawnpore - 73 years after independence.

Wikipedia says the company has not made profits since 1989. Surely, the least the government could have done was change its name to, say Pandit Deendayal Upadhyay Corporation? On second thoughts though, shutting that down could be difficult.

The longevity of British India Corporation is a scandal, a reflection of all that is wrong with the government policies towards zombie PSUs. It is time we got rid of these walking dead.
Manas Chakravarty
Tags: #banking #PSU
first published: Jan 25, 2021 09:09 am
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