The Divestment Commission, in its 22nd report, has recommended the divestment of government stake in two public sector companies -- the Central Cottage Industries Corporation of India Ltd and North Eastern Electric Power Corporation Ltd.
The commission has favoured the sale of 100 per cent equity in CCIC to a strategic buyer after withdrawing all cash surpluses towards meeting the needs of the company.
CCIC, a retail trading organisation dealing in handicrafts and handlooms, is wholly owned by the government, with an authorised capital of Rs 12 crore (Rs 120 million) and paid-up share capital of Rs 10.85 crore (Rs 108.5 million). It has 488 employees on its rolls.
The corporation operates five emporiums at prime locations in Delhi, Mumbai, Kolkata, Bangalore and Chennai and has a manufacturing facility at Noida.
CCIC has been reporting losses for the past three years, and posted a loss of Rs 42.76 crore (Rs 427.6 million) in the last financial year.
In the case of NEEPCO, the commission has recommended the sale of 51 per cent stake to a private partner, along with manpower rationalisation and capital restructuring.
It said the restructuring details should be worked out in consultation with the prospective bidders. The commission also said in view of the sensitivity attached to the Northeast, the remaining 49 per cent of the equity should be retained by the government for at least five years.
The divestment panel further said if the government failed to sell its stake in NEEPCO, because of a lack of bidders or some other reason, the company should be merged with the National Thermal Power Corporation or National Hydel Power Corporation.
NEEPCO, which employs 3,275 people, has an authorised share capital of Rs 2,500 crore (Rs 25 billion) and a total paid-up capital of Rs 1,918.1 crore (Rs 19.18 billion), of which Rs 53.21 crore (Rs 532.1 million) is pending allotment.
For the last few years, the corporation has been profitable mainly on account of revenue from interest and surcharge on dues payable to it by states and state electricity boards (SEBs). SBI Capital Markets is working on the financial restructuring package of NEEPCO.
With regard to NHDC, which is wholly owned by the government, the commission said it played an important developmental role for handloom weavers and hence it be retained as a government company.
If the government were to withdraw the mill gate price scheme for supply of yarn and other basic inputs, the commission recommended the sale of NHDC to a strategic buyer.
