Public sector entities get power to close, divest units

New Delhi: The union cupboard on Wednesday accredited a call to supply extra autonomy to public sector entities (PSEs) by empowering their boards to determine on the closure and divestment of items or subsidiaries.

The cupboard additionally delegated extra powers to the choice mechanism to accord ‘in precept’ approval for disinvestment and minority stake sale in Maharatna PSUs.

The choice is aimed toward reforming the functioning of PSEs, permitting them higher autonomy and serving to the boards to take well timed and speedy monetary choices, an official assertion stated.

This proposal will permit them to well timed exit their investments in subsidiaries, items or joint ventures (JVs), enabling them to monetise their funding at an opportune time or shut their loss-making and inefficient items on the proper time. “This can lead to expeditious resolution making and saving of wasteful operational/monetary expenditure by the PSEs,” it stated.

At present, the board of administrators of holding or dad or mum PSEs have the powers to determine on fairness investments for establishing JVs and wholly owned subsidiaries and enterprise mergers or acquisitions, topic to a internet price threshold. Nonetheless, they don’t have the powers to determine on disinvestment or closure of their subsidiaries or items or stake in JVs. An exception are Maharatna PSEs which have some restricted powers to determine minority stake disinvestment of their subsidiaries.

Subsequently, the Cupboard’s approval is required for each strategic disinvestment and minority stake sale or closure of the subsidiaries/items or sale of their stakes in a JV, no matter the dimensions of operations or capital deployed at such subsidiaries.