BOARD COMPOSITION CHAIRMAN Dr. Nitish Sengupta, Former Secretary to Government of India, Ex-Member of Parliament(13th Lok Sabha) (with status of Minister of State)
NON-OFFICIAL MEMBERS Shri T.S. Vijayaraghavan, Former Secretary to Government of India Shri Arvind Pande, Former Chairman, Steel Authority of India Limited Prof. Sushil Khanna, Professor of Economics & Strategic Management, IIM
OFFICIAL MEMBERS Shri R.S. Gujral, Secretary, Department of Expenditure Shri Ravi Mathur, Secretary, Department of Disinvestment Shri O.P. Rawat, Secretary, Department of Public Enterprises
PERMANENT INVITEES Shri Atul Chaturvedi, Chairman, Public Enterprises Selection Board (PESB) Shri C.S.Verma, Chairman, Standing Conference on Public Enterprises (SCOPE) Shri Sudhir Vasudeva, CMD, Oil and Natural Gas Corporation, Ltd. (ONGC)
SECRETARY TO THE BOARD Ms. S. Rawla, IAS
ABOUT BRPSE BOARD FOR RECONSTRUCTION OF PUBLIC SECTOR ENTERPRISES (BRPSE) BACKGROUND The Government constituted Board for Reconstruction of Public Sector Enterprises (BRPSE) vide Resolution dated 6.12.2004 as an advisory body to address the task of strengthening, modernizing, reviving and restructuring of Central Public Sector Enterprises (CPSEs) and advise the Government on strategies, measures and schemes related to them. TERMS OF REFERENCE a. To advise the Government on ways and means for strengthening public sector enterprises in general and making them more autonomous and professional; b. To consider restructuring – financial, organizational and business (including diversification, joint ventures, seeking strategic partners, merger and acquisition) – of CPSEs and suggest ways and means for funding such schemes; c. To examine the proposals of the administrative Ministries for revival/restructuring of sick/ loss making CPSEs for their turnaround; d. To advise the Government on disinvestments/closure/sale in full or part, in respect of chronically sick/loss making companies, which cannot be revived. In respect of such unviable companies, the Board would also advise the Government about sources of fund including sale of surplus assets of the enterprise for the payment of all legitimate dues and compensation to workers and other costs of closure; e. To monitor incipient sickness in CPSEs; and f. To advise the Government on such other matters as may be assigned to it. INCIPIENT SICK CPSEs BRPSE identifies incipient sick CPSEs (incurring loss consecutively for two years) every year based on Public Enterprises Survey and monitors their performance. RECOMMENDATIONS OF BRPSE Since the inception of BRPSE and till September, 2013, the Board has given its recommendations in respect of 64 CPSEs. The recommendations of BRPSE in respect of 64 CPSEs fall under the following broad categories: S. No. Category
No. of CPSEs
1
Revival through restructuring package
45
2
Revival through take over by State Govt./ Joint venture with CPSEs/ Disinvestment
8
3
Revival through merger/takeover
5
4
Closure
6
Total
64
OTHER RECOMMENDATIONS OF BRPSE: BRPSE, besides giving recommendations on sick CPSEs, has also recommended scheme for attracting Top Managerial Talent to sick CPSEs which has been approved. The Board also recommended measures to the Government for strengthening CPSEs (particularly sick CPSEs), which includes enhancement of superannuation age of Board level and below Board level appointees, revision of VRS/VSS schemes, incentivizing employees, relaxation in recruitment rules for Board level appointees in sick CPSEs. APPROVAL OF THE GOVERNMENT Out of the 64 cases recommended, Government Holding Companies have approved proposals for revival of 47 cases of CPSEs and closure/winding up of 3 CPSEs. ENHANCEMENT OF RETIREMENT AGE IN SICK/LOSS MAKING CPSEs Committee of Secretaries (CoS) has mandated to undertake examination of proposals for enhancement of age of superannuation from 58 to 60 years in sick/loss making CPSEs and give its recommendations. In pursuance of the mandate, complete proposal received for increase of retirement age from 58 to 60 in respect of one CPSE has been recommended. PERFORMANCE OF SICK CPSEs Out of the 47 CPSEs approved for revival, 24 CPSEs posted profit during 2011-12. Out of the 47 CPSEs, 15 CPSEs have been declared turnaround till 2012 as they have posted profits consecutively for 3 or more years after the assistance by the Government. BRPSE conducted three “BRPSE TURNAROUND AWARD: 2010, 2011 AND 2012” ceremonies on 10.3.2011, 14.11.2011 and 29.6.2012 respectively to felicitate these turnaround sick CPSEs. BRPSE has also released books documenting the efforts of the Government in reviving sick/loss making CPSEs through the institution of BRPSE.
CHAIRMAN Government of India Board for Reconstruction of Public Sector Enterprises Ministry of Heavy Industries & Public Enterprises Public Enterprises Bhawan, Block No. 14 CGO Complex, Lodhi Road, New Delhi-110003
From the Chairman’s Desk I feel privileged to write the foreword of this booklet brought out by the Board for Reconstruction of Public Sector Enterprises titled “On the Wings of Transformation”.
DR. NITISH SENGUPTA Ex Member of Parliament (Lok Sabha)
When India became independent, it was facing a host of socio-economic problems. India at that time was an agrarian economy with a weak industrial base, low level of savings, inadequate investment and lack of infrastructural facilities. There existed considerable inequalities in income and levels of employment, regional imbalances in economic development and lack of trained manpower. As such, State’s intervention in all the sectors of the economy was inevitable since private sector neither had the necessary resources nor the will to undertake risks associated with large long-gestation investments. Given the type and range of problems faced by the country on the economic, social and strategic fronts, it became a pragmatic compulsion to use the public sector as an instrument for self-reliant economic growth. There are 260 Central Public Sector Enterprises (CPSEs) as on 31.3.2012. Out of which 225 are operating CPSEs and 35 are yet to commence operations and are under construction. Total net profit of CPSEs is ` 97513 crores. 161 CPSEs made profit of ` 125116 crores. The investment, turnover, capital employees, employment, profits have been increasing. It contributed ` 1.60 lacs crores in 2011-12 to central exchequer. They have spread over the length and breadth of the country and are engaged in diverse sectors of the economy. Even after liberalization in 1991, contrary to the general perception, CPSEs are able to compete with both domestic private sector companies & MNCs. Some have emerged as trans-national companies. During the last few years of global economic slowdown, it was the public sector which made India could withstand the economic downturn considerably. Employment opportunities have not reduced. There were 89 CPSEs incurred loss in 2003-04 and their number has come down to 63 by March,2012. Similarly, there were 81 sick CPSEs in 2004-05 and their number has come down to 64 by March, 2012. The reasons for their sickness may vary from unit to unit. The Government has been proactive in strengthening public sector. By setting up the Board for Reconstruction of Public Sector Enterprises (BRPSE) in December, 2004 to address the task of strengthening, modernizing, reviving, and restructuring of Central Public Sector Enterprises (CPSEs) and advising the Government on strategies, measures and schemes related to them. BRPSE has examined 64 proposals referred to it by the Government. It has given recommendations to the Government for revival of 58 CPSEs and closure of 6 CPSEs. Based on recommendations of BRPSE, the Government has approved revival of 44 CPSEs and closure of 3 CPSEs envisaging total assistance of ` 28354 crores. In case of 2 sick CPSEs, namely, Bharat Coking Coal Ltd. & Eastern Coal Field Ltd. and Hindustan Fluorocarbons Ltd., their Holding Companies namely,
Coal India Ltd. and Hindustan Organic Chemicals Ltd. are implementing the revival plan. BRPSE recommendations have helped the Government to firm up its views. BRPSE has also given other recommendations for strengthening CPSEs, particularly sick CPSEs, which includes higher salaries/superannuation age for Board level appointees, enhancement of superannuation age of Board level and below Board level appointees, incentivising employees, etc. BRPSE explores all options for revival/restructuring of sick CPSEs. It has followed revival through financial restructuring/joint venture/disinvestment/merger/takeover. It also includes revival through merger/takeover of sick CPSEs by healthy CPSEs, wherever there is synergy in operations. The Board’s guiding principle is that all options to revive an enterprise should be considered and closure should be the last option. The basic spirit behind the revival packages of BRPSE is enablement & empowerment rather than doling out funds. Cash support has been used sparingly as an exception rather than as a rule. Only ` 5287 crores were received by these enterprises based on BRPSE recommendations. In some sick CPSEs the revival package is being implemented by their holding companies. About two lakhs employees have been benefited due to revival. The number of sick CPSEs are coming down. Till now, BRPSE has declared 15 sick CPSEs as “turnaround” as they posted profits consecutively for 3 or more years after the implementation of revival package sanctioned by the Government .They were felicitated with “BRPSE Turnaround Award”. Now, 4 more CPSEs are added to the list of Turnaround which is a recognition to the efforts made by the management, employees, etc. of the CPSEs. There are some sick CPSEs which have not yet shown signs of revival even after sanction of revival package. However, BRPSE will put all its efforts and lend its hand to the Government in strengthening public sector and to improve the performance of sick CPSEs. Off late, the Board is reviewing the implementation of revival packages sanctioned by the Government based on the recommendations of BRPSE and tilling the gaps suitably. I believe that the stories of 4 sick CPSEs in this booklet inspire other CPSEs which are in the process of revival and more such CPSEs will transform the future of this country.
DR. NITISH SENGUPTA October, 2013 | New Delhi.
contents BHARAT COKING COAL LTD. / 09
NATIONAL FILM DEVELOPMENT CORPORATION LTD. / 15 NATIONAL PROJECTS 21 / CONSTRUCTION CORPORATION LTD.
27 / SAIL REFRACTORY UNIT Formerly Bharat Refractories Ltd.
Bharat Coking Coal Ltd. AT A GLANCE ÊÊ BCCL was incorporated in 1972 to operate coking coal mines in Jharia (Jharkhand) and Raniganj (West Bengal) and became subsidiary of Coal India Ltd. (CIL) in 1975. ÊÊ It is the only Company with substantial resources of prime coking coal in the country and meets around 50 percent of total prime coking coal requirement of the integrated steel sector. ÊÊ It had been incurring losses since inception and net worth was first eroded in 1995 and again in 1999-2000. ÊÊ BRPSE recommended a revival plan for a sum of ` 4382 crores to be implemented by CIL. ÊÊ It started earning sustainable profit since 2009-10 onwards. ÊÊ It achieved highest production of 31.21 Million Ton coal production, turnover of ` 10176 crores and PBT of ` 1709 crores in 2012-13. ÊÊ It implemented 2007 pay scales. It repaid the entire loan of ` 1350 crores taken from CIL under revival plan. ÊÊ It projects to achieve production of 36 Mil. Ton coal by 2015-16. It plans capex of ` 2100 crores on various projects. ÊÊ Master Plan to deal with fire and subsidence in Jharia coalfield is in implementation. It would unlock large superior grade coal bearing area for increasing production and profitability.
Sri Tapas Kumar Lahiry graduated in Mining Engineering from the Indian School of Mines, Dhanbad in 1976. He took over as CMD, BCCL in 2008. His rich experience and leadership has helped in turning around BCCL as well as the introduction of new initiatives. He is now working for taking the company to the trajectory of higher growth. He has been bestowed with various awards, including the Distinguished Alumni Award by the Indian School of Mines, Dhanbad in 2012.
TAPAS KUMAR LAHIRY CMD BHARAT COKING COAL LTD. Koyla Bhawan, P.O. Koyal Nagar District-Dhanbad www.bccl.gov.in
the past Bharat Coking Coal Ltd. (BCCL) was incorporated in 1972 to operate coking coal mines in Jharia, Jharkhand (273 Km2) and Raniganj, West Bengal (32 Km2) coalfields, taken over and nationalized by the Government of India to ensure planned development of scarce coking coal resources in the country. Non-coking units near to coking coal mines were also nationalized in 1973 and placed under the control of BCCL. BCCL became a subsidiary of Coal India Ltd. (CIL), a Maharatna Company, in November, 2005. BCCL is the only company with substantial resources of prime coking coal in the country. There is no domestic competitor as of now. It operates 66 coal mines (figures as on 1.04. 2013), consisting of 34 underground (UG), 12 opencast (OC) and 20 mixed mines. It also runs six coking coal washeries and two non-coking coal washeries. BCCL meets almost 50 per cent of the total prime coking coal requirement of the integrated steel sector. BCCL Fire-fighting
BCCL had been incurring losses since inception and its networth first eroded in 1995. As a result of conversion of ` 996 Crore of loans of the CIL into equity as a part of Capital Restructuring Package approved by the Government for CIL, the net worth became positive in 1998 and came out from BIFR. As the net worth became negative again in 1990-2000, BCCL was referred to BIFR in 2001. The main reasons for sickness were: i. Excessive manpower disproportionate to the production at that time; AKWMC-BCCL
ii. Progressive hike of wages; iii. Working capital problems due to continuous losses; iv. Non-availability of land; v. High density of population in coal-bearing areas limits the equipment’s size of opencast operations; vi. Difficult geo-mining conditions restrict production and productivity; vii. Insufficient investment in mining equipment due to acute fund crunch leading to ageing of equipment, and shrinkage of capacity, thereby resulting in decrease in production, etc.
BCCL at Dhanbad
Washery
the enablement The revival plan submitted earlier to BIFR was suitably modified and submitted to BRPSE for its consideration by the Ministry of Coal. BRPSE deliberated the revival plan on 28.08.2005 and again the revised revival plan on 22.02.2008. BRPSE noted as under: i. BCCL is the only source of prime coking coal in the country and the demand for coking coal is much more than the supply. Therefore, there is no problem in marketing BCCL coal.
The above waiver of ` 2, 539 Crore (` 1, 456 Cr + ` 1, 083 Crore) was effected by converting it into 5 per cent non-convertible, cumulative, redeemable preference shares to the CIL.
ii. As BCCL posted profit in 2005-06 due to various The plan was implemented with full dedication and devotion, which helped the company to come out of red, measures, the company is viable. a year and a half ahead of the terminal year of turnaround iii. Constraints limiting production and productivity i.e. 2013-14. affected working capital generation and profitability, which pushed BCCL into a vicious circle of financial STRATEGY FOR REVIVAL crisis, are required to be addressed. The revival plan envisaged the following strategies: BRPSE recommended a revised revival scheme for BCCL, a. Revamping Heavy Earth Moving Machinery (HEMM) envisaging cash infusion of ` 1, 350 Crore and non-cash capacity in existing OC mines through increased assistance of ` 3, 032 Crore and interest on other loans investment; accrued, in its 56th meeting held on 22.02.2008. The waiver of the loan of ` 1, 083 Crore and current account b. Continue deployment of H/HEMM in isolated patches; balance of ` 1, 456 Crore as well as accrued interest on c. Closure of highly loss-making UG mines to reduce other loans which were extended in the year in which losses; BCCL was enabled to report a positive net worth. The entire cash and non-cash assistance sought by BCCL d. Modernisation of UG mines and Washeries; is being borne by its holding company i.e. Coal India e. Opening up of large OC projects to be worked through Limited (CIL). H/HEMM. BIFR approved the Draft Rehabilitation Scheme (DRS) The focus of the revival package was on: on 28.10.2009 and Ministry of Coal communicated its vetting on 25.02.2010 for the implementation of a. Increasing production through investment in machinery; rehabilitation scheme by CIL. BRPSE reviewed the implementation of the revival plan b. Cost-cutting through closure of mines and redeployment of manpower to take benefit of natural on 30.10.2012 and reiterated to CIL to extend the balance attrition; and assistance of ` 2, 539 Crore and interest on other loans accrued (` 382 Crore as on 30.06.2012) immediately in c. Utilizing the low cost benefits of H/HEMM in as many the current financial year to make the net worth positive mines as possible. and execute expansion plans/capex plans which will enable it to grow faster.
CHAPTER ONE / 11
the present i. The company which was a perennially loss-making viii. Prepared a strategic plan for long term production entity, started earning a sustainable profit since growth and sustainability, which envisaged working 2009-10. upto combined seam by opencast method and thereafter approaching the underlying seams by ii. The company absorbed impact of ` 857.18 Crore pay underground method, converting the constraint of revision of workers (NCWA-IX) during 2011-12. multi seam working into opportunity. The problem of iii. 2007 pay scales were implemented. Employee non-availability of land also solved. benefits like promotion to all eligible non-executive ix. Introduced the cluster concept for getting employees, clearance of long pending LTC/LLTC Environmental Management Project (EMP) clearance dues and pending payments to CMPF, etc. have been for all mines of the BCCL and obtained EMP clearance extended. for mines under 14 out of total 17 clusters. iv. It achieved ever-highest turnover of ` 10, 176.62 x. Manual loading stopped in the underground mines Crores and PBT of ` 1, 709.06 crores in 2012-13. of the company since 2009, making the BCCL, the v. It achieved 31.21 Million ton coal production in first coal company to do so. The entire piece rated 2012-13, highest since its inception. miner loaders (13000 nos) were converted, to line rated worker for gainful utilization and reduction of vi. It achieved 33.04 Million ton off-take in 2012-13, idle wages in the process highest since inception with 9.56 percent growth. xi. Ecological restoration of mined-out degraded land vii. The company repaid the loan of ` 1, 350 crores taken started in the company-around 50 hectares is from Coal India Limited. already done. xii. Continuous rationalization of manpower leading to increased per-employee productivity.
future strategy i. Strategic plan, as approved in 2008, will be v. One rapid loading system 5 MTY capacity with silo is under construction for faster dispatch. implemented in letter and spirit to achieve physical performance at 1-2 MTY (at 7-10 per cent) growth on vi. Development of high capacity UG mines with global year-to-year basis. BCCL plans to produce 36 MTY by technology is under progress. Mega-open cast mines the end of Twelfth Plan. have been planned in future. ii. The Master Plan to deal with fire and subsidence vii. The new concept of ecological restoration will in Jharia coalfield approved by GOI in 2009 with a continue to be implemented. Ecologically restored stretch of 10 years is in implementation. As the sites will become natural forests in due course of implementation progresses, it would unlock large time thus generating livelihood opportunities as well superior grade coal bearing area for increasing as can be exchanged for mineral rich “NO GO” areas. the production and profitability and ensure long term growth. Construction of 25000 houses for viii. Obtaining EMP of all mines under cluster concept for rehabilitation of fire affected BCCL employees is long-term sustainability. under progress. BCCL is 2 – year ahead of the ix. BCCL plans to incur ` 2,100 on various capex schedule in its part in implementation of Master Plan. projects. iii. Modernization of underground mines taken up x. Natural attrition will reduce manpower to 45,000through Mine Developer and Operators (MDO) to 50,000 in the next plan period and will improve enhance UG production. employee productivity. iv. 6 new washeries with 18.6 MTY capacities will be installed. Workorder for two washeries have already been issued.
PRE & POST REVIVAL PERFORMANCE OF BCCL PARTICULARS
PRE-REVIVAL
(` In crores)
POST-REVIVAL
04-05
05-06
06-07
07-08
08-09
09-10
10-11
11-12
12-13
Coal Production (Mil. T)
22.31
23.31
24.20
25.22
25.51
27.51
29.00
30.20
31.21
OBR (MM3)
39.60
43.96
46.25
50.61
53.60
61.63
83.23
81.36
84.26
O.M.S(Te)
1.18
1.34
1.48
1.60
1.68
1.85
2.06
2.20
2.45
Off Take (Mil. T)
22.44
22.34
24.10
24.01
24.61
25.08
29.39
30.16
33.04
Sales price/te
966.97
1095.20
1002.55
1069.95
1287.09
1644.79
1936.95
2127.45
2475.68
Cost of production (MT) 1161.34
1159.45
1140.92
1264.91
1794.33
1446.98
1646.72
2003.15
2014.89
Gross sales
2884.10
3467.04
3271.95
3385.95
3866.54
5038.34
6951.77
8583.87
10176.62
Net sales
2540.60
3112.28
2879.20
2954.78
3399.13
4515.15
6157.11
7280.48
8454.60
PAT
-959.43
202.67
49.58
86.61
-1380.47
794.19
1093.69
822.36
1498.80
Manpower
92268
87146
83578
80051
76369
71838
67934
64884
61698
Net worth
(4926.02)
(4723.36)
(4673.77) (4816.61)
(6197.07)
(5402.88)
(4309.19)
(3486.86)
550.97
capex
88.60
290.87
204.11
221.16
293.35
320.94
410.72
266.15
133.82
PROJECTED PERFORMANCE OF BCCL
(` In crores)
PARTICULARS
2013-14
2014-15
2015-16
Coal Production (Mil. Te)
32.50
33.50
35.00
OBR (Milion³)
84.25
87.00
88.00
O.M.S(Te)
2.59
2.80
3.04
Off Take (Mil. Te)
33.20
33.50
35.00
Sales price (` te)
2332.25
2356.78
2557.75
Cost of production (`/te)
2110.46
2257.27
2415.74
PBT
1550.00
1750.09
1850.50
Net worth
1598.07
2780.28
4030.38
CAPEX
850.00
550.00
700.00
Manpower
58957
55596
53456
CHAPTER ONE / 13
National Film Development Corporation Ltd. AT A GLANCE ÊÊ The National Film Development Corporation Ltd. (NFDC) was incorporated in 1975. ÊÊ Its primary objective is planning and promoting an organized, efficient and integrated development of the Indian Film Industry. ÊÊ Due to de-canalization of film activities, emergence of new television channels and decision to source the Free Commercial Time content internally by Doordarshan, high manpower cost, NFDC started incurring continuous losses which eroded the net worth of the Company by March, 2005. ÊÊ Based on the recommendations of BRPSE, the Government approved in September, 2010 a revival package of ` 31.40 crores with change in business model enabling NFDC to be a media-campaign agency to Ministries/departments and PSUs of the Central Government along with DAVP. ÊÊ NFDC turned to be a profit making Company since 2009-10. ÊÊ Total income increased from ` 68.20 crores in 2009-10 to ` 251 crores in 2012-13 mainly from media-campaign business. ÊÊ Net loss of ` 10.29 crores in 2009-10 turned to net profit (PBT) of ` 8.31 crores in 2012-13. ÊÊ Negative net worth of ` 20.73 crores as on 31.3.2010. became positive net worth of ` 22.75 crores by 31.3.2013. ÊÊ 74 films digitally restored and released in the market. NFDC has so far funded/produced over 300 films. Launched Video On Demand web site www.cinemasofindia.com ÊÊ 2007 pay scales were implemented. ÊÊ A Media campaign agency for Government Dept. is critical for its future growth.
Nina Lath Gupta, a post-graduate in Political Science and a graduate in English Literature, was an IRS officer of 1989 batch. She joined the National Film Development Corporation Limited (NFDC) as the Managing Director in 2006 after resigning from the Indian Revenue Service. Before joining the NFDC, she had a tenure in the Ministry of Information & Broadcasting, Government of India. She was a nominee Government Director on the Board of the NFDC from 1999 to 2000. Under her leadership and management, NFDC has turned around as a CPSE. She has laid down a road map of future growth of the company by taking various initiatives. She has been recognised by various domestic and international magazines.
NINA LATH GUPTA Managing Director National Film Development Corporation Ltd. Discovery of India Building (6th Floor) Nehru Center, Dr. Annie Besant Road, Worli, Mumbai-400018 www.nfdcindia.com
the past The National Film Development Corporation Ltd. (NFDC), a Central Public Sector Enterprise under the administrative control of the Ministry of Information & Broadcasting (M/o I & B), Government of India, was incorporated in 1975. It was restructured in 1980 by the merger of erstwhile Indian Motion Picture Export Corporation and the Film Finance Corporation. Its primary objective is planning and promoting an organized, efficient and integrated development of the Indian film industry. NFDC’s activities include film production and distribution, promotion of Indian Cinema in festivals and markets abroad, Film Bazaar, production and publicity for Government clients, promoting new talent, script development, etc.
Doordarshan (2003), which accounted at nearly 88 per cent of revenue, NFDC had lost business streams. The company’s inability to identify alternative sources of revenue and developing other existing revenue streams impacted its revenue generation adversely and could not cross-subsidize its developmental activities. A declining With the de-canalization of film activities in 1992, revenue phase with high manpower cost caused emergence of new television channels and decision to continuous losses which eroded the net worth of the source the Free Commercial Time content internally by company by March, 2007.
the enablement The Ministry of I&B submitted a proposal for revival of the company to BRPSE in February 2010. Revival Plan recognised the following: a. Regional/cultural films made in other languages are at a nascent stage and require support in terms of production, funding, promotion, exhibition and distribution and in this context, NFDC has an envisaged role to play for development of regional/cultural/documentary films. b. Developmental activities particularly production of feature films would be funded by Government of India. c. There is a need to provide a continuous stream of income. Hence, BRPSE concurred with the Policy of the Ministry of Information & Broadcasting enabling NFDC to function as a full-fledged advertising solutions’ supplier to departments/ Ministries and PSUs of the Central Government along with DAVP. Based on the recommendations of BRPSE, the Government approved the following revival package in September, 2010: i. Financial support a. Cash infusion of ` 3 Crores for upgradation of preview theatres, to create the Cinemas of India VOD platform, launch of distribution label. b. Conversion of outstanding working capital loan of ` 19.77 Crores and accumulated interest there on of ` 8.63 Crores into equity.
Knowledge Series at Film Bazaar, Goa
STRATEGY FOR REVIVAL The company initiated a multi-pronged strategy to improve its performance and initiated the following steps: 1. Manpower was rationalized by 50 per cent through VRS and hired services of experts in the relevant fields. 2. Branch offices were closed down to reduce fixed expenses. 3. Loss-making film financing activity was discontinued. 4. Various initiatives were taken for growth in revenue including market penetration in media campaign for Government departments, diversification in “Mid-Career Training”, product development and international collaboration.
the present i. After implementation of revival plan, NFDC has ix. Infrastructure up-gradation was done/under progress. Theatres with latest technology are under improved income from all activities of business year construction. after year and turned to be a profit making company since 2009-10. x. The Company has developed and launched Video On Demand web site www.cinemasofindia.com, a ii. Total income increased from ` 68.20 crores in multifaceted distribution platform, showcases classic 2009-10 to ` 251.24 crores in 2012-13. and critically acclaimed cinema. iii. Net loss of ` 7.69 crores in 2009-10 turned to net xi. NFDC provides platforms for interaction between profit (PBT) of ` 8.31 crores in 2012-13. Indian film makers and members of the film fraternity iv. Negative net worth of ` 20.73 crores as on 31.03. abroad through Film Bazaar and International Film 2010 became positive net worth of ` 22.75 crores Festival of India. by 31.03.2013. xii. 2007 pay scales were implemented. v. Better cash management enabled to generate more other income. NFDC commissioned 28 feature films for production across 13 Indian languages and introduce 18 new film vi. Media Campaign for government departments has makers under 11th &12th Five Year plan Scheme “Film enabled to achieve multi-fold growth in turnover Production in various regional languages”. Its recent film from ` 44 crores in 2009-10 to ` 174 crores in “The Good Rood” has been entered in the US Academy 2012-13. of Motion Pictures Arts & Sciencs as India’s official entry vii. 74 films, digitally, restored, and released in the for the Oscars, 2014. market. viii. NFDC has so far funded/produced over 300 films in various languages. Some of them were widely acclaimed and won many national and international awards.
CHAPTER TWO / 17
PHYSICAL PROGRESS Pre-Revival Period FY 2007-08 to 2009-10
Post-Revival Period FY 2010-11 to 2012-13
Films commissioned in three years
11
15
No. of DVDs released in three years
NIL
64
4
9
Advertisement / Short / Corporate films produced in three years
158
400
Number of media campaigns released in three years
40
531
- No. of Delegates
345
700
- Countries
22
33
Audio-Video restoration and digitization of films in three years.
NIL
81
PARTICULARS
No. of films released in theatre in three years
Participation in Film Bazaar in fiscal 10 / fiscal 13)
FINANCIAL PROGRESS Post-Revival FY 2012-13 (` In crores)
PARTICULARS
Pre-Revival FY 2009-10
Total Income
68.20
251.24
PBDIT
(3.96)
9.52
Profit Before Tax
(7.69)
8.31
Profit After Tax
(7.13)
6.34
Net Worth
(20.73)
22.78
FINANCIAL PERFORMANCE Year
08-09
09-10
10-11
11-12
12-13
Turnover Turnover (including other income)
17.31
68.20
185.00
255.71
Other income
2.99
3.63
3.75
7.28
12.59
PBDIT
(6.56)
(3.96)
2.40
5.27
9.52
PBT
(10.30)
(7.69)
1.55
4.08
8.31
(` In crores)
251.24
future strategy PLANS FOR SUSTAINABLE REVIVAL NFDC has thus increased its focus on the aspects of film development, film production, film marketing, film distribution and film exhibition. Given the objectives stated above, NFDC proposes to include the following activities in its plans for the next five years in addition to its existing business verticals.
Film production in progress
Making EOR 197
VIP Viewing Room
NFDC Preview Theatre in Mumbai
i. Production of films in various Indian languages and promotion of new talent through implementation of the Plan Scheme of the Ministry of Information and Broadcasting for Production and Co-Production of Feature Films in Various Indian Languages. Also, promotion of good cinema including providing wholesome entertainment to children. ii. NFDC plans to set up a well-sized exhibition network to exhibit cinema that is critically acclaimed. iii. NFDC intends to set up an R&D Division, where research and data collection of various aspects of the film business are carried out. iv. Restoration of old film prints and their digitization through processes incidental and ancillary there to preserve the country’s rich film heritage. v. Make www.cinemasofindia.com a pay per view Internet model – accessible to audiences across the country through content dubbed in various Indian languages. vi. To develop film-related talent by organizing international-level training workshops for film professionals in the spheres of script writing, film production management, film direction and international marketing and distribution. vii. To create and promote a space for Indian documentary filmmakers and help enhance the quality and number of documentary films produced in India. CHAPTER TWO / 19
National Projects Construction Corporation Ltd. AT A GLANCE ÊÊ Set up in 1957 as a construction Company to cater to irrigation, water resources, power and heavy industries. ÊÊ In its 56 years of existence, NPCC completed several national projects. ÊÊ Transfer of NPCC from M/o Irrigation & Power to M/o Water resources in 1989 eroded its assured work order from M/o Power. Incurring continuous losses from 1989-90 onwards which eroded net worth. ÊÊ Government approved a non-cash assistance revival plan in December, 2008 based on the recommendations of BRPSE in 2006. ÊÊ Turnover increases from ` 578 crores in 2005-06 to ` 1220 crores in 2012-13 ÊÊ Earning profits consistently since 2009-10. Negative net worth became positive in 2012-13. ÊÊ Implemented 2007 pay scales. It is a debt free Company as of now. ÊÊ It has orders worth ` 4181 crores as on 31.3.2013. It projects to achieve total income of ` 2165 crores by 2017-18.
Shri H.L.Chaudhary, B.E. Civil (Hons.) from IIT, Roorkee and Member of Institution of Permanenet Way Engineers and Institution of Bridge Engineers, is Chairman and Managing Director of National Projects Construction Corporation Ltd. w.e.f. 24.10.2013. He has vast & rich experience of over 32 years and worked in various capacities in Indian Railways, RITES, ADB, Tanzania Railways Ltd. etc.
H. L. CHAUDHARY Chairman & Managing Director National Projects Construction Corporation Ltd. Plot No. 67-68, Sector-25 Faridabad-121004, Haryana www.npcc.gov.in
the past National Projects Construction Corporation Limited (NPCC) was set up in 1957 as a premier construction company to create necessary infrastructure for the economic development of the country in the core sectors of irrigation, water resources, power and heavy industries. The administrative control of NPCC, from the Ministry of Irrigation and Power (was transferred) to Ministry of Water Resources in 1989.
NPCC’s core competence, at both domestic and international platforms, lies in the construction of dams, barrages, canals and tunnels among other underground projects, hydro-electric and thermal power projects and the construction of townships, residential and institutional buildings, office complexes, roads, bridges & fly-overs, industrial structures, real estate works, surface transport projects & environmental projects.
Construction site
It has thus provided the necessary resource, manpower and the knowhow for the construction of national projects and has also acted as a price deterrent for the private sector. In its fifty-six years of existence, NPCC has successfully associated itself with the successful completion of several national projects from conceptualization to the commissioning stage. Some of these landmark projects have been realized in extremely remote and hazardous locations in the country. Besides the completion of construction projects in India, NPCC has also executed several overseas projects in Iraq, Bhutan and Nepal. However, the transfer of the administrative control of NPCC from the Ministry of Irrigation Power to the Ministry of Water Resources in 1989 eroded its assured work orders from the Ministry of Power. High manpower costs, revisions in the pay, the inability to face challenges posed by a new business environment and liberalization were some of the reasons for its downfall, which also resulted in working capital problems and non-acquiring of the latest machinery, equipment and technology in execution of projects. Since posts in the apex management remained vacant for a considerably long period, the absence of managerial capabilities in the organization further aggravated the unfavorable circumstances. NPCC, thereby, started incurring continuous losses from 1989-90 onwards, leading to the erosion of the nett worth in 1990-91 which later stood at (-) ` 768.24 crores on 31.3.2005.
Flyover Construction
the enablement The Ministry of Water Resources referred the revival plan of NPCC to BRPSE. BRPSE’s revival strategy recommended on 10th January, 2006, inter alia, included: i. Financial restructuring to strengthen the balance sheet; ii. Infusion of funds to settle liabilities; iii. Government counter-guarantee to facilitate the bidding for new projects; iv. Organizational restructuring with a business focus by filling up Board-level functional posts, creating ED’s posts in functional areas and redeployment of manpower in closed units for gainful utilization and taking up more departmental work to utilize man and machine at the optimum level. The Government of India approved the revival plan on 26.12.2008 envisaging the conversion of the Government of India’s principal amount of ` 219.43 crore, and the cumulative interest due and accrued on it of ` 427.46 crores to equity capital and further written down to 10 percent of value. No cash infusion was made.
Road formation work
Border fencing at Indo-Bangladesh Border
JBIC, Tripura
Flood Lighting at Indo-Bangladesh Border
CHAPTER THREE / 23
the present IMPLEMENTATION OF REVIVAL SCHEME, ORGANISATIONAL RESTRUCTURING HAS TURNED AROUND THE COMPANY i. NPCC has 2009-10.
been
consistently
earning
since ix. NPCC is now an ISO 9001-2008 organization with an employee strength of 1409.
ii. The negative nett worth of ` 655.06 crores, as on x. NPCC is currently executing projects of national importance in different terrains of the country. These 31.03.2006. became positive to ` 47.14 Crore by include31.03.2013. iii. The turnover of the NPCC increased from ` 577.66 Crore in 2005-06 to ` 1, 220 Crore in 2012-13.
a. Indo-Bangladesh border fencing, road works and border out post;
iv. The position of the work orders booked improved from ` 1, 547 Crore as on 31.03.2005 to ` 4, 181 Crore 31.03.2013.
b. Flood lighting works of IBB fencing;
v. All outstanding unpaid wages and salaries of employees (which were outstanding for 20 months since 2005) were paid up-to-date. PF dues of ` 48 Crore were also paid in full. The pay scales introduced in 2007 were also implemented. The VRS was also implemented with the Corporation’s own funds. vi. NPCC repaid the Government of India’s loan of ` 15.80 Crore, in addition to returning the loans taken from banks and other PSUs, thereby becoming a debt-free organization. vii. NPCC has gainfully utilized various infrastructure development schemes/projects of Government of India to improve its business. viii. NPCC secured work in new areas and entered into the sphere of implementing projects as a Project Management Agency to the Government of India and its different bodies for the successful implementation of PMGSY works and border fencing works.
GATF1 Bangalore
c. Assam Rifles Building works in North Eastern states; d. PMGSY works in Bihar, Jharkhand and Uttar Pradesh; e. Indo-China border road in Leh (J&K). f. Construction of a building and auditorium for the Central Research Institute in Unani Medicine at Lucknow. g. Construction of a regional staff college at Lucknow for the Punjab National Bank. h. Construction of the Indira Gandhi Tribal University campus at Amarkanthak (Madhya Pradesh) and Manipur. xi. BRPSE recommended enhancing the age of superannuation from 58 to 60 years.
Haithiari
future strategy NPCC HAS FORMULATED ITS FUTURE PLANS TO GROW ON A SUSTAINABLE BASIS i. It has planned to diversify in the real estate sector by commercial exploitation of its own properties, and entering into building-management services, environmental projects, especially sewerage treatment plants and solid water management projects, among others. ii. It has a proposal to enter into business of ready-mixed concrete and pre-cast elements. iii. It is exploring the possibility of participation in public-private partnerships and forming associates / joint ventures with profit-making PSUs and private companies in the area of mutual interest on a work-sharing basis. iv. MOUs have also been entered into with TCIL (Telecommunications Consultants India Ltd.) and WAPCOS for joint bidding and also with the Department of Health and Family Welfare and the Government of Arunachal Pradesh for the state’s crucial health institutions. v. It has orders worth ` 4,181 Crore as on 31.03.2013. vi. It projects to achieve a turnover of ` 2,165 Crore by 2017-18.
PRE AND POST REVIVAL PERFORMANCE OF THE NPCC Particulars
Pre-Revival
(` In crores)
Post-Revival
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Turnover
577.66
721.80
711.59
825.61
991.22
1061.15
1167.38
1155.04
Other income
9.28
18.70
17.84
15.44
11.70
21.09
56.62
65.53
PBT
2.26
-76.56
-36.62
-28.70
31.29
72.74
42.18
51.04
PAT
2.26
-76.56
-36.62
-28.70
31.29
72.74
42.18
50.97
Nett Worth
-655.06
-731.62
-768.24
-796.94
-118.75
-46.01
-3.83
47.14
PROJECTED PROFITABILITY
(` In crores)
Particulars
2013-14
2014-15
2015-16
2016-17
2017-18
Total Income
1360.00
1561.00
1795.00
2064.00
2165.00
Total Expenditure
1292.13
1484.06
1700.05
1939.60
2034.05
Net Profit
27.32
31.51
36.70
48.84
55.28
CHAPTER THREE / 25
SAIL Refractory Unit Formerly Bharat Refractories Ltd. AT A GLANCE ÊÊ Bharat Refractories Limited (BRL) was incorporated in 1974 as a subsidiary of Bokaro Steel Limited (BSL). It became an independent company under M/o Steel in1978. ÊÊ Primarily engaged in the manufacture and supply of refractories. ÊÊ Catering 95 percent of its products to steel plants of SAIL and RINL. ÊÊ Loss making Company since inception. Three revival packages given earlier did not turnaround it. ÊÊ The Government approved on 31.03.2008 the merger of BRL with SAIL along with a revival package on recommendations of BRPSE. ÊÊ The merger was completed by 28.7.2009 and named BRL as SAIL Refractory Unit (SRU) since then. ÊÊ SRU as a captive unit of SAIL enables to manage supply chain of refractories and control the market prices of refractories. ÊÊ Upgraded plant & machinery, technology and accessed to new technology with the funds to be provided by SAIL and accessed to the expertise of SAIL for the technological up-gradation. ÊÊ SRU turned the cornerstone. Physical & financial performance of SRU improved and a loss making BRL became a profit making Unit since 2010-11. ÊÊ Manpower productivity increased two-fold. Implemented 2007 pay scales. ÊÊ SAIL planned investment of ` 91.85 crores.
S. Hanumantha Rao is a 1975 Metallurgical Engineering graduate from Visveswaraya Regional College of Engineering, Nagpur. He joined the Steel Authority of India Limited in 1977 at the Bhilai Steel Plant. He is a technocrat with 33 years of experience in the steel and refractory department of Bhilai Steel Plant. Post the merger of Bharat Refractories Limited into SAIL on 28.07.2009. he has been leading the SAIL Refractory Unit as its Executive Director.
S. HANUMANTHA RAO Executive Director SAIL REFRACTORY UNIT (A Unit of SAIL) I.G. Marg, Bokaro Steel CITY Jharkhand-827004
the past Bharat Refractories Limited (BRL) was incorporated in 1974 and functioned as a subsidiary of Bokaro Steel Limited (BSL) with one unit namely Bhandaridah Refractories Plant. Consequent upon restructuring of the Public Sector Iron & Steel Industries, units under various entities were transferred to it and BRL became an independent company under M/o Steel in1978. BRL has been renamed as SAIL Refractory Unit upon merger with SAIL as per the revival package approval by the Government on the recommendations of BRPSE. It has four manufacturing units, 3 in Jharkhand (SRU Bhandaridah at Bhandaridah, SRU IFICO in Ramgarh, SRU Ranchi Road in Ramgarh) and one in Chhattisgarh (SRU Bhilai at Bhilai) Main Products - BRL primarily engaged in the manufacture and supply of refractories under high alumina, basic and silica category and sophisticated monolithic like Castables of different grades and slide gate refractories as well as mudgun and trough mass which are heat and corrosion resistant materials used in furnaces for steel plants. Major Customers - Its major customers are integrated steel plants. It is catering 95 percent of its products to steel plants of SAIL and RINL and balance to reputed steel manufacturers under private sector such as Tata, Jindal and Ispat group.
Magnesia Carbon bricks coming out of Curing furnace
BRL had been a loss making company since inception and referred to BIFR in 1992. Three revival packages given in 1996,1998 and 2002 did not make it turnaround due to various reasons. The major reasons for sickness of BRL were: i. formation of BRL by taking over closed sick private sector units, ii. working capital problems iii. failure in delivery schedules and loss of customer satisfaction iv. eroding order booking and underutilization of capacities, v. withdraw of purchase and price preference policies, vi. unable to acquiring new technology and equipment and make diversified products due to financial constraints, vii. high manpower cost, etc.
View of Hydraulic press for Basic bricks
the enablement Ministry of Steel submitted the restructuring proposal merger with SAIL based on the recommendations of an Expert Group to BRPSE. BRPSE noted as under: i. Refractory is one of the three major inputs in any steel industry. Having captive refractory unit has been the need of any steel plant. ii. As SAIL did not have its captive refractory unit, merger of BRL with SAIL would be mutually beneficial BRL and SAIL are in close commercial association since inception besides proximity of units. iii. SAIL is the primary customer of BRL and acquisition of BRL will help SAIL in managing supply chain of refractories. iv. If refractory prices are contained, ultimately cost of production of steel of SAIL is reduced. v. SAIL will have competitive advantage at a time when many large steel companies are seeking new capacities. vi. The merger would enable BRL to upgrade its plant and machinery and access new technology with the funds to be provided by SAIL. vii. BRL can also access the expertise of SAIL for the technological up-gradation. viii. BRL can also overcome its working capital problems BRPSE, accordingly, recommended on 14.12.2006 restructuring package to Bharat Refractories Ltd. and merger of BRL with SAIL. The Government approved on 31.03.2008 the merger along with a revival package envisaging waiver of GOI loans & interest of ` 216.37 crores, conversion of loan of ` 16.50 into equity, redeem preference share capital of ` 12.05 crores from fresh equity infusion and setting off of accumulated loss of ` 226.04 crores against equity. The merger had been given w.e.f. 1.4.2007 and completed by 28.7.2009 as per Amalgamation Scheme BRL was named as SAIL Refractory Unit(SRU) since then.
300 tons converter in SMS-II
CHAPTER FOUR / 29
Blast Furnace cast house with trough castable
the present TURNAROUND STRATEGY & IMPACT OF MERGER ON BRL & SAIL Integration of BRL was done with SAIL on all fronts by forming a cross function team. This benefited both BRL and SAIL. Impact of merger of BRL and SAIL is across the two units which include: a. IMPACT OF MERGER ON BRL: i. Introduced SAIL’s systems & procedures. ii. Introduction of Pitch Creosote Mixture, an internal by-product of Bhilai Steel Plant, at SRU Bhilai has given significant cost reduction. iii. Financial availability facilitated maintaining optimum production level. iv. Inducted SAIL’s experienced manpower at strategic levels v. All employees of BRL were absorbed as employees of SAIL and were given all benefits & service conditions of SAIL alongwith of SAIL’s Salary & wages structure applicable to SAIL employees. Superannuation age was enhanced from 58 to 60 years. This has boosted employee morale of erstwhile BRL employees. vi. R&D activities which was the major bottleneck, resumed under the guidance of Research & Development Centre for Iron & Steel( RDCIS) with sufficient funds. vii. Assured order position helped in capacity planning and optimum utilisation of capacity, planning bulk procurement of raw materials at competitive price. Emphasis was laid to improve the quality and cost of steel products of SAIL. viii. Quality assurance plan has been put in place and all 4 manufacturing units are ISO 9001 certified b. BENEFITS TO SAIL 1. Development of new products and improvements in performance of existing products will give benefits in improving crude steel productivity and reduce steel making cost. i. Converter life at Durgapur Steel Plant: Converter refractory life supplied by SRU increased nearly two fold and a life of 6250 heats is achieved.
ii. Steel Ladle refractory life at SMS-II BSL: Steel ladle life increased to the tune of 30 percent when compared with BRL’s supply. iii. Twin Hearth Furnace Roof Life at BSP: Roof bricks supplied by SRU gave a life of 576 heats which is highest in last six years. iv. Development of HA-92 Castable: High Alumina castable with 92 percent Alumia is used in most vulnerable area of Steel Ladle. Any failure in the area will drain entire steel tapped in the ladle. SRU developed the product and commercial production as well as supply is continued. v. High conductivity Ramming Mass: SRU developed the product and supplied the material for capital repair of Blast Furnace no. 5 of BSP. vi. Life of trough castable in Blast Furnace: Trough castable life supplied by SRU increased nearly 25 percent. 2. SRU as a captive unit of SAIL enables to manage supply chain of refractories and control the overall market prices of refractories. 3. THE COMBINED EFFORTS HAVE GIVEN ITS RESULTS. SRU TURNED THE CORNERSTONE. PHYSICAL & FINANCIAL PERFORMANCE OF SRU IMPROVED AND A LOSS MAKING BRL BECAME A PROFIT MAKING UNIT SINCE 2010-11. 4. Manpower productivity increased two-fold. The manpower strength has been optimized. Manpower as on 1.4.2013 is 1425.
future strategy 1. Investment towards strengthening the environment management system. 2. Capital investment for replacement old/ obsolete equipment. This will enhance productivity and ensure equipment reliability. 3. Selective augmentation in manufacturing capacity to meet the changed refractory requirement profile of SAIL particularly post modernisation of SAIL. 4. An investment of ` 91.85 crores is planned. Some of the major schemes are a. Installation of 2 nos new 2000Ton Hydraulic Press b. Installation of New De- dusting system in all 4 units c. Installation of facilities for Manufacture of 50 TPD Mudgun Mass. d. Installation of New Raw Material Shed in the 3 Jharkhand based plants The merger of BRL with SAIL has been a win-win situation for both. It provides flexibility for mid-course corrections and customization for both SRU & steel plants.
PRE & POST REVIVAL PERFORMANCE OF SRU PARTICULARS
(` In crores)
PRE-REVIVAL
POST-REVIVAL
PROJECTED
2006-07
07-08
08-09
09-10
10-11
11-12
12-13
13-14
Production(bricks & masses) (MT)
88793
90951
95595
103075
114580
113221
106575
131600
Net sales
163
170
211
271
378
420
457
641
PBDIT
7.54
14.65
16.40
-3.03
23.71
15.14
12.39
13.35
Net Profit
-15.31
4.44
7.38
-10.88
20.67
11.41
9.76
10.80
Net worth
-167.47
-163.04
-148.67
29.04
49.71
61.12
70.88
81.68
Performance of SRU should be seen as committed unit of SAIL and not as an independent company.
Blast Furnace metal runner with trough castable
CHAPTER FOUR / 31
Blast Furnace cast house with trough castable
ACKNOWLEDGMENT As Secretary to the Board, I feel it is my proud privilege in being a part of the transformation process of 4 CPSEs which have been restored to health once again. My sincere gratitude to Shri Praful Patel, Hon’ble Minister, Heavy Industries & Public Enterprises for his support and commitment to the Board. He has been a constant source of inspiration and strength. Dr. Nitish Sengupta, Hon’ble Chairman, BRPSE has been with us all along with his guidance, suggestions and support at each stage. I also thank the Members of the Board, our Permanent and Special Invitees for their valuable efforts in charting the growth path of these CPSEs. I express my sincere thanks to Shri O.P. Rawat, Secretary, Department of Public Enterprises, who has been vocal for revival of sick CPSEs and has provided all support in accomplishment of the mandate assigned to BRPSE. My special thanks also to the Chief Executives, along with their teams, who believed in the turnaround of their respective companies and worked wholeheartedly to make that belief a reality. National Film Development Corporation has accepted the challenge of designing, printing and publishing this booklet within a short period. I am grateful to Ms. Nina Lath Gupta, MD, NFDC and her team. I would be failing in my duty if the untiring efforts of the officers and staff of the Board in collection and compilation of data etc., are not specially mentioned and appreciated.
S. RAWLA Secretary, BRPSE October, 2013 | New Delhi
BOARD FOR RECONSTRUCTION OF PUBLIC SECTOR ENTERPRISES Department of Public Enterprises Block No. 14, CGO Complex New Delhi-110003 www.dpe.nic.in