Time ticks away for SITCO, Sikkim Jewels, GFPF & SPIL

High level committee to decide on fate of viability of PSUs

source:Sikkim Express | www.sikkimexpress.com


GANGTOK, August 11: After giving signals and financial assistance to the Public Sector Units (PSUs) in Sikkim to be self-sustainable, the State government has now decided to review the status of Sikkim Jewels Ltd, Sikkim Time Corporation, Government Fruit Preservation Factory and Sikkim Precision Ltd and decide whether to go for privatization or disinvestment.

The State government has already decided in principle to disinvest or privatize these four PSUs and a committee has been formed under the chairmanship of chief secretary TT Dorji to take measures relating to disinvest or privatize the entities.
The decision was taken on the last week of July.

The State chief secretary said the State government had been giving signals to these units over the years that they have to be viable and self-sustainable.

“This is an issue that has been discussed every year. Every year, the State government, in its wisdom, has been giving signals to the units that they have to viable and self-sustainable. We cannot extend time every year and this time we are taking a re-look and then come up with a decision”, said Dorji.
The chief secretary said that a committee has been formed under his chairmanship to see how the four PSUs are faring in the past seven-eight years though emphasis will be on the performance in the last two years. “The emphasis will be on the last two years, their products and demand. More or less, the units should be self-reliant but at the moment, they are not doing well”, he said.

The other members of the high level committee are additional chief secretary, finance secretary and law secretary with industries secretary as the member secretary. The committee has been tasked to decide on the procedure to be adopted for disinvestment or privatization and will be submitting its recommendations to the State government within three month’s time.

The chief secretary said that the PSUs are more or less dependent on the State government. We have see how there units are faring and see whether they should be continued or disinvested or made into joint ventures, he said.

“The products should have to be globally competitive or we have no choice but to discontinue. We will look into their items and see whether these items have markets. We need to have a re-look and decided whether to go for privatization or joint ventures”, said Dorji.

Even the Thirteenth Finance Committee had recommended that all States need to draw up a roadmap for closure of non-working PSUs by March 2011 and divestment and privatization of PSUs should be considered and actively pursued.

Regarding the future of the employees in these units, the chief secretary said that the committee will be looking into every aspect while drafting its recommendations.

Out of the four industries, the Government Fruit Preservation Factory (GFPF) based at Singtam is the oldest PSU of Sikkim established way back in 1956 and produces 40 odd items including squashes, pickles, juice, ketchups, jams and marmalades with most of the raw material procured from the local farmers.

Spread over an area of 10 acres, the GFPF with its 90 employees is said to be in a financial mess over a decade like the other PSUs in Sikkim. Sources informed that the GFPF has shown tangible improvement in all sections like visibility, reduction in cost of production, aggressive marketing, clean and squeaky look of premises, new uniforms for work force, extended markets in entire North Bengal, attractive and new designs indicative of metro and traditional feel, and several other areas of professional management, he said.

However, the deeply ingrained problems remain and they will do so until there is a complete rehaul in all the three sectors of the production house, it was informed.
Most of the products are marketed in Sikkim and the products have reached all over North Bengal and products also reach New Delhi. The sale volume of GFPF for last year was Rs. 1.57 crores and the sale for the past four months of this financial year has already reached Rs. 1.25 crores.

The losses were attributed to high cost of production due to lack of cheap raw material, increase in sugar prices, very high overheads, age old machines which disable any form of innovation, difficulty in creating new markets, lack of a standard laboratory and improper R&D in taking out new products.

The second oldest PSU is Sikkim Jewels Ltd established in 1972 at Tadong, Gangtok. It is spread over an area of 3.23 acres and manufactures industrial jewel bearings and water meters and supplies its products to Titan Watches. It has 109 employees.
According to the company sources, the company machines do not stand relevant in terms of present market. The sources informed that company’s revenue went down from Rs. 20 lakhs per annum to below Rs. 5 lakhs due to recession and a proposed tie up with a Swiss company is still pending.

The State government is providing financial assistance to the company.
The third PSU on the disinvestment list of the State government is Sikkim Time Corporation (SITCO), established in 1976 located here at Deorali with 110 employees.

The management admitted that the company is a bad financial state and going through a rough phase for the past few years, though there has been a gradual recovery. The company managed to sell 40,000 watches in 2009 and its major markets are West Bengal, South and North India with plans to penetrate the North East markets.

The SITCO earlier had a tie-up with Hindustan Machines and Tools (HMT) and had manufactured watch parts for HMT. The tie-up is stagnant since 2001 and the SITCO has started making its own watches.

The fourth PSU proposed to be disinvested is Sikkim Precision Industries Ltd (SPIL) based at Boomtar, 2 kms away Namchi in South Sikkim.

According to its website, the SPIL was set up in 2001 and presently has 102 employees. It produces industrial power devices and small industrial parts.