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Divestment Of PSUs: HEC To Survive Menace

In the backdrop of setback suffered by the HEC while making abortive attempts to garner support from the PMO for a revival package, efforts are afoot to retain the PSU entity of the company against the divestment move

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Amidst a long-drawn struggle to obtain a revival package, Heavy Engineering Corporation (HEC) -with its headquarters at Ranchi in Jharkhand - is all set to survive the threat of possible divestment after mobilising alternate resources and that too, at variance with the wishes of the Prime Minister’s Office (PMO).

In the backdrop of setback suffered by the HEC while making abortive attempts to garner support from the PMO for a revival package, efforts are afoot to retain the PSU entity of the company against the divestment move. Although the PMO has refused to endorse the proposal for any further revival package to be granted in cash to the HEC and the company has been left with no option except to face divestment, the management concerned is exploring the possibility to salvage the PSU entity– even toying with the idea of being separated from the present controlling Department of Heavy Industry. The PMO is said to be adamant on divestment of the HEC owing to lapses on the part of successive managements in managing the company’s coffers. 

If sources privy to the top management of the HEC are to be believed, the company has proposed to be placed under the Department of Atomic Energy that is supposed to be potent enough to cater to the needs of the company. DAE has been engaged in the development of nuclear power technology, applications of radiation technologies in the fields of agriculture, medicine, industry and basic research. Incidentally, it does not have its own manufacturing unit and depends on five PSUs including Electronics Corporation of India (ECIL), Hyderabad, Indian Rare Earths Limited (IREL), Mumbai, Uranium Corporation of India, Singhbhum, Nuclear Power Corporation of India (NPCIL), Mumbai, Maharashtra and Bharatiya Nabhkiya Vidyut Nigam Limited (BHAVINI), Kalpakkam, Tamil Nadu presumably to get its work done.

The HEC management, however, aims to cash-in on the situation and procure business from different clients associated with DAE while working in tandem with the latter on different projects. It is claimed that the DAE has agreed in principle to take over the HEC from DHI. The department has resolved to send the proposal for vetting by the Atomic Energy Commission. The HEC is said to have solicited the favour from DAE in the garb of its on-going negotiations with Russia and Czech Republic to procure technical support.

In its quest for strategic sector business, HEC has signed an accord with Russia-based company OKBM for transfer of technology for the manufacture of components for a nuclear power plant at Moscow. More, the HEC signed agreements with Russia’s CNIITSMASH to establish a Centre of Excellence in India and modernise HEC’s facilities. HEC has already entered into a transfer of technology agreement with CNIITMASH for the manufacture of nuclear & thermal power component and ship shafts. The company also signed a MoU with Rosatom, Russia's state nuclear energy corporation, to locally manufacture equipment to be used in the Kudankulam nuclear power project, India’s single largest nuclear power station.

As per details available with well-placed sources at the HEC headquarters in Ranchi, the Joint Stock Company “I.I. Afrikantov OKB Mechanical Engineering” (Nizhny Novgorod, “Rosatom” State Corporation enterprise) is a pioneer in  advanced technologies and know-how and is the leader in the development of nuclear power component power equipment of PHWR (Pressurised Heavy Water Reactor) and VVER (Voda Voda Energo Reactor) of 700 MW to 1000 MW capacity. With more than 60 years of experience in designing and with a high scientific, engineering and manufacturing potential permit “Afrikantov OKBM” to successfully solve scientific and technical problems in the process of developing nuclear power plants and equipment meeting the highest safety and reliability requirements.

In view of a major decision by the Union Government to construct 10 units of 700 MW PHWR nuclear power plant in India, the HEC aims to reap substantial benefits. The four major components of 700 MW PHWR i.e. Steam Generator, Calandria, End Shield and Inlet/ Outlet Header are to cost Rs 20,000 crore and the HEC is targeting annual business of Rs 150-200 crores out of it.

More, in spite of the fact that the HEC is reeling under an acute financial crunch, it has a glorious past with manufacturing acquisitions for the Steel Sector, Mining and Mineral Sector, Railway Sector, Defence Sector, Nuclear Energy and Research Sector, Space Research Sector, etc. At present, it has a work order of about Rs. 1000 crore from Coal India Limited and Indian Railways in particular.

Meanwhile, during the recent visit of the 15th Finance Commission to Jharkhand under the leadership of its Chairman, N. K. Singh, the HEC reiterated its demand for financial assistance from the Centre for modernisation of the company. In his brief presentation before the Finance Commission, Chairman-cum-Managing Director of the company, Abhijit Ghosh sought a one-time grant-in-aid of Rs. 1300 crore for modernisation of the company. He contended that the company was no longer in position to survive merely with initiatives to waive off its different outstanding with banks and the power sector and required a turn-around package in cash to deal with its operational and production cost instead.

The past bears testimony to the fact that the grant of Rs. 200 crore lent to the company over a period of eight years remained a wasteful expenditure. The piecemeal payment of the fund time and again could neither absolve the company of the financial crisis pertaining to operational and production costs nor did it help settle outstanding with banks and power supplying units as well.

Notwithstanding, Niti Aayog has recommended a list of about 50 PSUs for privatisation in order to get rid of sick and loss-making units and they are being looked at by the Department of Investment and Public Asset Management (DIPAM) for strategic disinvestment. Niti Aayog is said to have been mandated by the Prime Minister's Office (PMO) to identify the PSUs for strategic disinvestment in view of the target pegged by the Government to get Rs. 80,000 crore from disinvestment or stake sales in PSUs during 2018-19 fiscal.

To top it all, the pertinent question that baffles the mind of many is: Can the Department of Atomic Energy afford to overrule the decision of the PMO and Niti Aayog even if it gets the proposal for the HEC’s takeover endorsed by the Atomic Energy Commission?

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