The Hindu Business Line : Tyre Corpn divestment Bill to be tabled in Parliament

New Delhi, Aug. 15 The Parliamentary Standing Committee on Industry has come down heavily on the Government for not making adequate efforts for the technology upgradation or reviving the marketing network of Tyre Corporation of India Ltd (TCIL), a public sector undertaking .

In its report tabled in Parliament, the House panel, headed by Mr Santhosh Bagrodia, has said that “despite repeated though delayed revival, no serious effort was made by the Government to make the company viable with a long-term strategy for technology upgradation or reviving the marketing network.”

While deploring the long delay in reviving this public sector company by the Government, the committee, however, gave its nod to the disinvestment of the company by clearing the Tyre Corporation of India’s (Disinvestment of Ownership) Bill for introduction in Parliament.

But it tightened some provisions pertaining to the interests of the existing employees and raised the protection period, from one to three years. These changes have been recommended after discussions with the employees and the West Bengal Government where TCIL is located.

Disinvestment methods

“The Government may consider, making a public offer or preferential allotment or private placement or by directing the company to make further issue of equity capital to the members of the public or preferential allotment or private placement as methods for the disinvestment,” the report said.

The committee also took a serious view of the practice of seeking Parliamentary approval as suggested by the Committee of Secretaries, without providing requisite information regarding valuation of the company, terms of the proposed joint venture and the prospects of the company.

Recommendations

“Such information is essential for a considered parliamentary scrutiny of the legislation, The committee, therefore, recommends that such information should be furnished by the Government to the Parliament as and when it takes up the Bill for its consideration and passage,” it said.

The committee has also recommended that the Bill should incorporate broader provisions regarding the valuation of lands, assets and liabilities that are aligned with the valuation methodology prescribed by Department of Disinvestment instead of confining the valuation on the basis of book value. It suggested incorporation of the relevant provisions in the Bill to prevent diversion of usage of land as per the norms of valuation prescribed by the Department of Disinvestment.

It may be recalled that the decision to divest the company was taken by the Government in April through Tyre Corporation of India (Divestment of Ownership) Bill. The Bill was thereafter referred to the Parliamentary Standing Committee on Industry.

An interesting aspect about the PSU is that the Government wanted to first bail out the company through a revival package before considering the option of inviting joint ventures. The bailout for the PSU, that has been defunct for more than 14 years, involved a mix of waivers and tax concessions amounting to more than Rs 800 crore.