How PSEs can be competitive

To make the public sector enterprises globally competitive, the Standing Conference of Public Enterprises has said the attempts of state-owned companies to spread wings should be part of government's economic diplomacy.

"The power visits of Prime Minister and Finance Minister to Europe, US and other countries that hold business potential should also have representatives of public sector just like the accompanying business delegations from apex industry chambers," SCOPE said pointing to attempts by energy and steel companies to acquire assets abroad.

To ensure that a PSE is not competing against the other in the global arena, the apex body of managers from public sector has said government should explore the avenues of joint operations of PSEs.

It has welcomed the concept of merger of foreign operations of nationalised banks or amalgamation of operations of trading houses like MMTC and STC.

In a theme paper on the upcoming conference on CPSEs: Developing Global Competitiveness, SCOPE has also recommended that the operations of PSEs in identical areas in the domestic market should be looked into as internal competition that the government wanted during the days of mixed economy regime has lost its relevance as most of the sectors have been opened up or liberalised.

"It would be worthwhile to look in to operations of PSEs in the identical areas and create strategies to synergise them for faster and meaningful growth of these entities," SCOPE said.

"Most of the PSEs are rather small compared to multinational companies. Therefore, mergers and acquisitions or consolidation (of PSEs) should be considered for meeting global competition," SCOPE said.

The idea of merger of BSNL and MTNL and debate in Petroleum Ministry on merger of oil PSUs to create integrated oil companies is relevant, it said.

For increasing global visibility and brand equity of PSEs, SCOPE has suggested that the option of listing shares of some of the more successful state-owned companies on the foreign bourses should be considered.

"In the transforming economy the government is increasingly going for part disinvestments of good and profit-making PSUs at the domestic bourses. It would be worth considering if the PSEs could be encouraged for global listing," it said.

SCOPE said foreign listing alone would help the public sector companies access global financial and other markets more quickly as investors and bankers would be assured of accounting policies and practices which would necessarily have to follow practices like GAAP.

For global visibility, the SCOPE has suggested the PSEs themselves should go abroad to set up joint ventures or recreate developed facilities like they have in India.

"A synchronised business strategy for consulting PSEs as also the manufacturing PSEs could also create a lot more conducive environment for these entities and give them an advantage for their expansion," SCOPE said.