The government on Wednesday began the process to exit loss-making state-owned firms and cleared two proposals -- strategic disinvestment of Bharat Pumps and Compressors Ltd and shutting down of Hindustan Cables Ltd (HCL), Kolkata.

The last strategic sale was undertaken by the government nearly 13 years ago in 2003-04, when it sold stake in Hindustan Zinc and Jessop and Co.

“The Cabinet Committee on Economic Affairs (CCEA) accorded "in principle" approval for strategic disinvestment of Bharat Pumps and Compressors,” said an official release.

The PSU, under the Ministry of Heavy Industries and Public Enterprises, had posted a net loss of ₹4,777 crore in 2014-15 and was recommended for revival and then disinvestment by the NITI Aayog in its report earlier this year.

“The CCEA has approved the proposal of Department of Heavy Industry for providing financial assistance amounting to ₹111.59 crore as non-plan loan to Bharat Pumps and Compressors Ltd, Allahabad,” said an official release.

The statutory dues such as provident fund and gratuity of retired employees will also be discharged and the outstanding dues of CISF will be cleared. “It will motivate the employees and improve the performance of the company. This will put an end to further legal complications and penal action against the company,” said the release.

Set up in 1970, the PSU was expected to be an import substitution unit for manufacture of sophisticated process pumps and compressors for core sector industries.

Meanwhile, the Union Cabinet approved the closure of HCL, which has been a BIFR referred company since 2002, and cleared a ₹4,777.05 crore for paying salaries, early retirement schemes and converting government loan into equity.

As per the Cabinet decisions, the employees will be offered voluntary retirement package at notional 2007 pay scales and other employees’ related liabilities, including payment of salary and wages from April 2015 till they are separated from the company will be settled as well.

“The disposal of assets of company will be in terms of the guidelines of Department of Public Enterprises,” said an official statement, adding that the total cash infusion for closure of the company will be ₹1,309.90 crore. It will also involve non-cash infusion of ₹3,467.15 crore for converting a Government of India loan into equity.

HCL has four manufacturing units at Rupnarainpur (West Bengal), Hyderabad (Telengana), Naini (U.P.) and Narendrapur (West Bengal). It has not had any production since January 2003.

“The proposal for closure of the company has been made as per the recommendations of Board for Industrial and Financial Reconstruction, Board for Reconstruction of Public Sector Enterprises and the roadmap approved by CCEA in December 2014 for phasing out non-plan budgetary support to sick PSUs,” said the release.

Finance Minister Arun Jaitley had in the Union Budget 2016-17 set a target of ₹20,500 crore from strategic sales in loss-making and sick PSUs this fiscal and had said the NITI Aayog would identify PSUs for strategic sale.

Last week, the CCEA had also approved winding up of Hindustan Diamond Company.

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