Next divestment targets: HSL and CSL

Mumbai: Two public sector shipbuilding yards - Hindustan Shipyard Ltd (HSL) and Cochin Shipyard Ltd (CSL) - are likely to become the main targets of the disinvestment commission in the next round of divestment of government holdings in public sector units.

Sources close to the development say the ministry of shipping, in response to a communication send by the ministry of disinvestment to all government ministries and departments asking them to name the entities under their arena that can be referred to the disinvestment commission for diluting government holding, referred the names of these two shipbuilding yards to the commission.

Besides this, the Expenditure Reforms Commission (ERC), formed by the central government, has also suggested the privatisation of HSL and CSL in its report submitted to the government in the end of last year. ERC, in its report on the ministry of shipping, said there is no strategic or commercial rationale for CSL to continue in the public sector and claimed that it is a fit candidate for privatisation.

Efforts should also be made to secure a strategic partner for the loss-making HSL through divestment of the government holding in the company, the ERC report said. The order-book position of both HSL and CSL has almost remained blank during the past one year due to a heavy competition from foreign shipbuilding yards.

The 30-per cent shipbuilding subsidy allocated by the government for all public sector yards in the country is the main source of revenue for these two shipyards, the sources say. Even the government-run Shipping Corporation of India is awarding its shipbuilding contracts to foreign shipbuilding companies because of the rock-bottom prices quoted by these companies for building ships.

The sources say the disinvestment ministry will soon refer the name of HSL and CSL to the cabinet committee on disinvestment for its approval, so that these can be referred to the disinvestment commission. The disinvestment ministry has so far referred four companies to the new commission for its study: Neyveli Lignite Corporation, RITES, Manganese Ore India and Project and Equipment Corporation of India.