The Hindu Business Line : Keltron revival plan awaits Govt nod

THE long-pending proposal for the rehabilitation of the public sector Kerala State Electronics Development Corporation (Keltron) now hinges on the Government's clearance of the package submitted by the company and the suggestions put forth by the Public Sector Restructuring and Internal Audit Board (RIAB).

The company has sought financial assistance to the tune of Rs 129.38 crore from the State Government as the cost of restructuring. The package includes Rs 57.85 crore for the one-time settlement of dues to the banks; capital investment of Rs 9.39 crore; and the VRS implementation cost of Rs 34 crore (to be spread over three years).

Keltron has requested the Government to bring it under the Ministry of Information Technology, and appoint it as the nodal agency for implementing IT in Government departments and for the e-governance initiatives of the Government, according to sources.

It is pointed out that the Tamil Nadu Government had made such an arrangement in the case of the State Electronics Corporation (Elcot). Keltron, as a nodal agency, would ensure less delay in specification finalisation, cost-effective purchases, optimum use of available resources and continued customer service support, the company said.

Meanwhile, RIAB has submitted a list of recommendations for the overall rehabilitation of Keltron. It has suggested that the subsidiaries be de-linked from the corporation and its investments in these companies be treated as a direct loan from the Government to them. The remaining liabilities of Keltron to the Government may be treated as Government equity in the company.

RIAB has also recommended that the transfer of funds by Keltron from its profit-making strategic business units (SBUs) to unviable units be stopped after giving the latter six months to improve performance and reviewing their profitability. Subsequently, the operation of loss-making SBUs should be discontinued.

On the liabilities to banks, RIAB has suggested that the company may be permitted to conclude a one-time settlement (OTS) agreement with the consortium of banks with the expected outlay of Rs 57.85 crore. The Government may extend a financial support of Rs 5 crore to Keltron during 2005-06 to make a part payment, considering the Government guarantee given to the banks. Further support by the Government for OTS should be linked to the achievements under a memorandum of understanding to be signed by Keltron with the Government.

Besides, Keltron may be directed to conduct a valuation of its unused assets so as to transfer them to State-level infrastructure and leasing agencies and raise resources to bridge at least part of the future commitments under the OTS.

RIAB has also recommended that the principal component of loan taken by Keltron for implementing VRS may be swapped using budgetary funds. Loans for Rs 11.48 crore and Rs 17.89 crore have been swapped during 2004-05 and 2005-06, respectively. A decision will have to be taken by the Kerala Industrial Revitalisation Fund (KIRF) Board on the outstanding interest component of the loan given by it to Keltron for VRS and this should be communicated to the Government.

In the case of funds of Rs 9.39 crore for capital investment, the requirement may be met from options such as equipment lease or from commercial borrowings without Government guarantee, RIAB has suggested.

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