Government to monitor capex by PSUs on monthly basis

The centre has decided to monitor the management and utilisation of capital expenditure by public sector units (PSUs) on a monthly basis, even as the government is looking at trimming its holding in several PSUs in order to raise funds.

The government, which has so far been an idle investor, would actively pursue investments by these companies in order to ensure better returns amid fiscal constraints.

At the same time, the government is looking for more buybacks by state-run units so that government can reduce its stakes in several companies.

Instead of the divestment route, the government is looking to cash-rich PSUs to buy backs government's holding to raise funds.

After the buyback of 25 per cent shares in Hindustan Aeronautics Ltd (HAL) and Bharat Dynamics Ltd (BDL), which fetched almost Rs5,300 crore, the government is looking for more such cases, sources said.

Rich state-run companies have idle cash surpluses of over Rs2,00,000 crore and the government is likely to aggressively follow the buyback model to achieve its disinvestment target of Rs56,500 crore for the current financial year (2016-17).

The centre has asked state-owned units to send a detailed report on their investments and capex plans, sources said, adding that the Prime Minister's Office is also keeping a close watch.

PSUs have also been asked to strengthen their balance sheets by restructuring capital wherever applicable, while expanding their business activities by leveraging their net worth.

''Keeping in mind the focus of the government on management of its investments in PSUs, a professional approach to capital management and capital restructuring is of great relevance,'' said Neeraj Kumar Gupta, secretary, department of disinvestment.

With the buyback of shares from HAL and BDL, total disinvestment revenue stands at Rs24,000 crore for 2015-16, against the revised estimate of Rs25,312 crore.

''The government has responded positively by participating in the buyback (in HAL and BDL),'' Gupta added.