Sale of PSU / stake sale in PSU
I am of the opinion that generally (unless things are too bad or product has no market), an enterprise can be turned out subject to achieve say a particular target IRR. I would like to give an example:
Say now BSNL has reported an OPERATING profit and government plans to revive it with investment in infrastructure of BSNL (4G LTE). However, now for that Investment, BSNL would not be issuing bonds, in fact it shall be an infusion from Government. I would rather say, does BSNL necessarily need to make an investment. I have a rather simple analogy / proposal.
I will give an anecdotal example:
BSNL has many large sized old office in Premium areas of CITY, for example in city of Pune, BSNL has some I guess 2 acre or 3 acre plot of OFFICE in Model Colony and Bajirao Road. Now, the average selling price of the home in that area is ~Rs. 10,000 to ~Rs. 15,000 per sq. ft. I propose that BSNL set up a proper technology center in the outskirts of city and put up small satellite offices and service center across the city wherever necessary. Now, this plot can be given on Joint Venture basis for development to say ‘NBCC’ (a government organization) to develop project and sell to people.
Probably in legacy technology, BSNL would have need large wired offices within local outreach, but with FIBRE OPTICS, the company would not need to depend on COPPER wire etc.
Why can we not do studies on fast track basis to identify strengths, weakness and solutions to problems in PSU and ensure that they are profitable.
In fact, profitable PSU will ensure that tax payer monies are not subject to “BURN RATE”.
On a lighter note, why don’t we get PE funds to invest in PSUs to turn them around, they are willing to BURN money in FLIPKART, etc. At least these businesses have assets to fall back to.
Solutions other than selling entire 100% stake or giving management control or SOME AMICABLE ROADMAP needs to be devised.
I feel cheated if that Government took Tax Payer money, burnt it in PSU and then decides to SELL IT. Why can we not develop JUNK BOND market for these type of PSU LOSS ASSETS ?
I would delve on Indian PSU and especially defence sector PSU based on review of CAG reports in the ensuing posts.