\n<\/a><\/strong>Source: Public Sector Enterprises Survey<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nIn 2014-2015, the company incurred total losses of Rs 933 crore. It was sixth in the list of the ten largest loss making public sector enterprises in India. In fact, it has constantly been in the list of the ten largest loss-making public sector enterprises since 2005-2006.<\/p>\n
Given that it has not produced anything since 2003, the closure has taken way too many years to finally happen. Other than the losses, the company also managed to accumulate a huge amount of debt. As of March 31, 2015, the company had a total debt of Rs 5,963 crore. And not surprisingly, the interest that needs to be paid on this debt was the biggest expense of the company.<\/p>\n
In 2014-2015, the total interest on debt amounted to Rs 747 crore. The company stopped production in 2003. Given this, it was not earning anything from its operations. In this scenario, in order to continue paying the employees on its rolls, it had to borrow money. Employees’ remuneration and benefits at Rs 113 crore was the second largest expense of the company.<\/p>\n
And how many employees did the company have? As on March 31, 2015, it had 1,533 employees. The number of employees as on March 31, 2013, was 1,832.<\/p>\n
This basically means that the government chose to run a loss of Rs 933 crore in 2014-2015, just so that 1,500 people continue to have a government job. By keeping Hindustan Cables and many other such companies alive, the government has gone around wasting the hard earned money of taxpayers over the years.<\/p>\n
The good part is that now that it is shutting down, the government will no longer have to bear the losses of the company. The government bears losses of the loss making companies in two forms. One is by putting money into the company every year to keep it going. Or it ultimately has to take on itself the entire debt that the company takes on to keep itself going. And the financial system lends to the company despite it not making any money because it knows ultimately they are lending to the government.<\/p>\n
The other good thing that will happen is that the government will end up with a lot of land (on which any public sector<\/a> enterprise like Hindustan Cable sits). The 2014-2015 annual report of Hindustan Cables points out that the company got land free of cost from state government of West Bengal as well as erstwhile Andhra Pradesh. This land should be returned to the states and can become a part of the land bank that states can use to attract industries.<\/p>\nThis is very important given that the land acquisition policy in the country remains a mess<\/a>. Hence, land from public sector enterprises which are shut down can be an important source of land in the short to the medium term, for a programme like Make in India to take off.<\/p>\nFurther, it is important that the government continues with this and shuts down more loss making public sector enterprises in the time to come, especially those companies which haven’t been producing anything for a while.<\/p>\n
Take the case of Hindustan Photo Films Manufacturing Company Ltd. Between 2004-2005 and 2014-2015, the company had accumulated losses of Rs 12,432 crore.<\/p>\n
In 2014-2015, the company incurred total losses of Rs 2,164 crore. It was fourth in the list of the ten largest loss making public sector enterprises<\/a>. In fact, it has constantly been the list of the ten largest loss-making public sector enterprises since 2004-2005.<\/p>\n