Public sector enterprises have played a significant role in Indian development. They have been set up with the objective of helping the country to achieve self-sufficiency in manufacturing and technology. In 2015, there were 298 central PSUs under the administrative control of various Ministries/Departments in India. Out of these only 235 were in operation. The net profit of profit making (157 CPSUs) stood at 1,30,363 crore in 2014-15, while net loss of loss making (77 CPSUs) stood at 27,360 crore.
The aggregate real investment in Central Public Sector Enterprises (CPSEs) in India, measured in terms of ‘gross blocks', increased from 17,56,530.80 crore in 2013-14 to 19,06,796.31 crore in 2014-15, registering a growth of 8.55 per cent over the previous year. The investment in CPSUs in Kerala in terms of gross block grew by 11.69 per cent from 33,865.88 crore in 2013-14 to 37,825.79 crore in 2014-15. The state's share in total investment by CPSUs increased from 1.93 per cent in 2013-14 to 1.98 per cent in 2014-15 (Public Enterprises Survey 2014-15). Among Indian States, Maharashtra was ranked first with respect to share in investment by CPSUs (with a share of 16.97 %) followed by Tamil Nadu (share of 6.51%) and Uttar Pradesh (share of 6.22%). Details of Central Sector Investment in Kerala for 2012-13 to 2014-15 are given in Appendix 3.5 and Central Sector Investment in selected states as on 31st March, 2015 are given in Appendix 3.6
Kerala's share in investment by Central PSUs from 2011-12 to 2014-15
is exhibited in Figure 3.5. It may be seen that the share of Kerala
has declined after 2011-12.
Source: Public Enterprises Survey 2014-15
In Kerala, State Public Sector Undertakings (PSUs) play a crucial role in the development of the economy, especially in the manufacturing sector. PSUs consist of State Government companies and statutory corporations established to carry out activities of commercial nature. As per the report of Comptroller and Auditor General of India on Public Sector Undertakings in Kerala, there were 126 PSUs in Kerala as on March 31, 2015. Of these, there were 122 Government companies and 4 statutory corporations. Out of the 122 Government companies, 107 are currently working while 15 are non-working PSUs. Sector-wise distribution of government companies is as follows: 50 companies in the manufacturing sector, 16 in infrastructure, 18 in finance, 3 in power, 16 in agriculture and the allied, and 19 in the service sectors. It is important to note that the 15 non- working PSUs are in the manufacturing sector. As per the latest finalised accounts of working PSUs in the State as on March 2015, 50 PSUs earned profits, 53 PSUs incurred losses and 4 PSUs made neither profits nor losses. Under the Industries Department, Government of Kerala, there are 43 State PSUs, of which 37 are in the manufacturing sector and 7 in the non-manufacturing/service sectors. The performance of PSUs under Industries Department during the last 5 years is given in Appendix 3.7.
The total value of production in the 43 State PSUs under the Industries Department has increases from 2,405.11 crore in 2014-15 to 2,829.72 crore in 2015-16, registering a growth of 17.65 per cent. At the same time, turnover of these state PSUs grew by 0.63 per cent during 2015-16 compared to its previous year. Details of PSU-wise turnover and profit/loss during 2015-16 are shown in Appendix 3.8. The combined value of production and turnover of 43 State PSUs under the Industries Department from 2011-12 to 2015-16 are shown in Figure 3.6.
Source: Public Sector Restructuring and Internal Audit Board
It may be seen that there has been no significant variation in the combined turnover of these State PSUs for the last three years. But the combined value of production decreased in 2014-15 and subsequently increased.
Ten State PSUs under the Industries Department reported profit in 2015-16 as against 13 in 2014-15. The total profit made by the profit-making PSUs increased from 61.30 crore in 2014-15 to 98.32 crore in 2015-16. Major profit making units in 2015-16 were Malabar Cements Ltd (.38.75 crore), Kerala State Industrial Development Corporation Ltd (34.55 crore), and Kerala Minerals and Metals Ltd (21.16 crore).
Even though the number of loss making State PSUs increased from 30 in 2014-15 to 33 in 2015-16, the total losses made by loss making State PSUs decreased from 241.23 crore to 208.12 crore during this period. Major loss-making State PSUs during 2015-16 were Kerala State Textile Corporation Ltd.(29.50 crore) and Kerala State Cashew Development Corporation (25.15 crore). Performance trend of 43 State PSUs from 2011-12 to 2015-16 is depicted in Figure 3.7.
The combined net profit made by all 43 State PSUs under the Industries Department was 212.86 crore in 2011-12, but this fell to 75.65 crore only in 2012-13. From 2013-14 onwards, the combined net profits of these state PSUs has been negative. In 2015-16, the combined net loss incurred by the 43 State PSUs amounted to 109.80 crore. Erosion of working capital, lack of timely up-gradation of technology, limited product diversification, inability to cope up with the changing market demand, increase in cost of production, tough competition from other firms, competition from cheap imports and mounting financial liabilities (including statutory payouts) have adversely affected the performance of State PSUs. It is high time to initiate focussed and time bound action for bringing out drastic changes in the sector to improve the performance of State PSUs, which in turn will help to stimulate economic growth in the State.
RIAB, constituted in 1993, undertakes reform initiatives in state owned enterprises in Kerala. Major responsibilities of the agency include performance planning and monitoring of PSUs, enterprise reconstruction, capacity building, recruitments in PSUs and governance advisory support to State PSUs. The Government has been providing funds to PSUs for modernisation and expansion and also as working capital assistance. This benefitted 26 PSUs in 2012-13, 22 PSUs in 2013-14, 30 PSUs in 2014-15 and 36 PSUs in 2015-16. During the first four years of the 12th Five Year Plan, Government has invested an amount of 350.20 crores for the revival and rejuvenation of PSUs. Expenditure out of this outlay (during the 12th Five-Year-Plan period) amounted to 296.67 crore. During 2016-17, an amount of 100 crore was set apart for this purpose.
There were 27,505 Joint Stock Companies in Kerala as on March 2016, of which 25,899 (94.16 %) were private limited companies and 1,606(5.84 %) were public limited companies. There were 1,396 companies, which were newly registered between April and September 2016. During 2015-16, 1,642 companies were newly registered (1,561 Private Limited and 81 Public Limited). The number of companies wound up/dissolved/struck off/amalgamated from April to September 2016 were 330. Three public companies were converted to private companies and 2 companies were converted from private to public companies. Total number of government companies as on March 2015 was 140 (96 Public Limited and 44 Private Limited companies). There were 712 joint stock companies started by women entrepreneurs in Kerala from April to September 2016. Details of joint stock companies working in Kerala are given in Appendix 3.9.
Kerala Financial Corporation has been playing a major role in the industrialisation of Kerala. The main objective of Kerala Financial Corporation (KFC) is to extend financial assistance to micro, small and medium enterprises (MSME) in the manufacturing and services sectors. Financial assistance is provided in the form of term loans, working capital loans and special schemes. KFC is a member of Credit Guarantee Fund Trust for Micro and Small Enterprises. Activities of the Corporation are the following.
The Corporation sanctioned loans amounting to 1,025.99 crores in 2015-16 and disbursed an amount of 838.36 crore in 2015-16. An amount of .415.83 crore was disbursed to various SSI units and 422.53 crore to other units during 2015-16. As on March 31,2015, the Corporation sanctioned loans for an amount of 7,263.41 crore and disbursed 6,573.68 crore.The corporation reported profit (before taxation) of 20.35 crore during 2015-16 as against 30.03 crore during 2014-15. Performance of KFC during the last seven years is given in Appendix 3.10. The details of loan operations and industry-wise classification of loans during 2015-16 of KFC are shown in Appendix 3.11 and Appendix 3.12.
Kerala State Industrial Development Corporation Ltd. (KSIDC) was
established in 1961 as the premier industrial investment agency
of the Government of Kerala. KSIDC initiated major industrial and
infrastructure projects, which are strategically important to Kerala's
industrial and economic development. KSIDC also plays a vital role
in entrepreneurship development in the State. The plan outlay and
expenditure by KSIDC during 2014-15, 2015-16 and 2016-17 are given
in Table No 3.2.
*As on October 2016
Source: Accounts & Planspace, State Planning Board
During the financial year 2015-16, KSIDC financed various projects involving a capital investment of 2,069.62 crores with direct term loan assistance of 76.65 crores and Rs.10 crore under share capital assistance, which are expected to generate employment for 10,000 persons directly and indirectly. The Corporation disbursed 67.76 crore and a total amount of 118.36 crores in recovery by way of principal and interest. The operating profit of the corporation has come to 49.98 crores during 2015-16, which is a record in the history of the corporation. Majority of projects financed by the Corporation during 2015-16 are under metals and chemical sectors, hospitality, rubber and infrastructure sectors. The physical and financial performance of KSIDC during 2015-16 is given in Appendix 3.13. Details of allotment of land in KSIDC Industrial Park as on October 2016 is shown in Appendix 3.14.
KSIDC conducted Young Entrepreneurs Summit” (YES) with the theme of collaborating and networking' and had tied up with Indian Software Product Industry Round Table(ISPIRT) & India Private Equity& Venture Capital Association (IVCA) for YESCAN 2015. KSIDC had set up first All Women Incubation Centre at Assumption College, Changanacheery.
KSIDC developed the infrastructure facilities in its Industrial Growth Centres (IGC) at Kannur, Kozhikode, Alappuzha and Thiruvananthapuram districts. KSIDC has also initiated a special finance assistance scheme known as “Angel Fund/Seed Fund” to promote entrepreneurship among youth making them job providers rather than job seekers. Cumulative assistance sanctioned under the scheme is 366 lakhs for 18 innovative ventures. The total stage wise disbursement of funds during 2015-16 is 110.50 lakhs. It had set up a 120 seat incubation space spread over an area of 4500 sq.m.at Infopark, Kakkanad Kochi. KSIDC has developed a light Engineering Industrial Park at Palakkad in 34 acres of land. First and second phase of infrastructure work of this park are completed.
Ease of Doing Business (EoDB) is an initiative by the Department of Industrial Policy and Promotion, Government of India, for simplifying clearance procedures for starting an industrial project. Based on the direction, KSIDC appointed M/s KPMG as the Consultant to undertake a study to reform the existing rules and acts relating to clearance procedures for starting an industrial unit in Kerala. They have submitted the draft report detailing the core areas of focus, steps to improve the EoDB ranking, standard operating procedures of departments/agencies, amendments required for acts/rules, and recommendations to improve the ease of doing business' environment in the State.
The Government of Kerala has introduced the 'Single Window Clearance System' to ease the setting up of industrial projects in the state. KSIDC is the nodal agency for the scheme and has cleared 8 major projects across various sectors during the past financial year.
KSIDC is the nodal agency representing State of Kerala in the scheme, 'Make in India' announced by Government of India
KSIDC initiated one to one mentoring sessions with young prospective entrepreneurs willing to start enterprises in Kerala. Initiatives were also taken up in association with agencies such as CII and TiE for providing mentoring support in many colleges. Some of the colleges that benefitted include TKM Institute of Management, Kollam, and Mar Beseleous College of Engineering & Technology, Trivandrum, National Institute of Technology, Calicut and Rajagiri School of Social science, Ernakulam. Incubation centres have also been set up in some of these educational institutions.
Kerala Industrial Infrastructure Development Corporation (KINFRA) was set up in 1993 with the objective of creating infrastructure facilities in the State and thereby create an environment conducive for industrial development. KINFRA is specifically aimed at setting up industrial parks/townships/zone in industrially backward regions of the State. The outlay and expenditure by KINFRA during 2014-15, 2015-16 and 2016-17 are given in Table 3.3.
As on October 2016
Source: Accounts & Planspace, State Planning Board
The Industrial Parks developed by KINFRA have facilities such as developed land, built up space, dedicated power supply, continuous water supply, communication facilities, facilities for administrative block, bank, post office and security. These parks provide a good environment for starting up industrial units with minimum time and cost.KINFRA has completed infrastructure development in 12 key industrial sectors with world–class infrastructure in 22 Industrial Parks, of which 8 are catering exclusively to the Small & Medium Enterprises Sector. Some of the notable achievements are the successful completion of International Apparel Park at Thiruvananthapuram, Export Promotion Industrial Park at Ernakulam, Infotainment Park, the Film & Video Park at Thiruvananthapuram and Food Processing Industrial Park at Malappuram. KINFRA has developed small Industries Park at Thiruvananthapuram, Pathanamthitta, Ernakulam, Thrissur, Kannur, Wayanad and Kasaragod.
KINFRA has promoted investments in the State and created investment friendly climate within its Parks, contributing significantly to the State's economy. In this regard, 634 industrial units have been allotted land in the various Industrial Parks of KINFRA with total investment of 1581 crore and providing direct employment to 35,898 persons. KINFRA has also implemented a Single Window Clearance system in all the Parks. The Single Window Clearances system operating in the Parks are helping the investors to establish their units without hassles. The details of allotments in KINFRA Industrial Parks as on October 2016 are given in Appendix 3.15.
The Centre for Management Development (CMD) is a leading, self-supporting autonomous institution which provides research, consultancy and training support to development agencies, corporate and governments at the national, state and local levels. Established in 1979, it is sponsored by the Government of Kerala as an independent, professional, registered society. In 2015-16, the centre completed 43 research projects. In addition, the centre also completed 9 training programmes on Management Development /Entrepreneurship Development /workshops and 7 training programmes on Micro Enterprises Development were conducted.
Shortage of land has been a major constraint to the growth of manufacturing in Kerala. High density of population, nature of settlement in the State and relatively high price of land are factors that reduce the availability of land for industrial purposes. Kerala's labourers are educated and skilled, and at the same time they are also conscious about their rights. Delays in obtaining clearances for manufacturing investment, environmental problems associated with large industrial projects, and a relative paucity of entrepreneurship have adversely affected the growth of manufacturing industries in the State.
Hence, key interventions are needed in the manufacturing sector of Kerala focusing high-end technologies and products, and creating large-scale employment for skilled workers. Government can play the role of facilitator in attracting investments and creating a conducive environment for advanced manufacturing activities.