#22 - Sentiment vs Sustainability: Why Some PSUs Must Be Closed to Move Forward?

Sentiment vs Sustainability: Why Some PSUs Must Be Closed to Move Forward?

There are many PSUs in Kerala that have multiple business verticals. There are also several units located in different places of the same organisation that carry out the same work or manufacture similar products.

Should this not be reviewed through a professional lens—by rationalising operations, cutting down surplus units, closing non-profitable product lines, and shutting down units that are no longer relevant?

Travancore Cements Limited (TCL)

Travancore Cements Limited was established in 1946 for the manufacture of grey cement. Later, it switched to white cement production by tapping the abundant basic raw material, lime shell, available in the Vembanad Lake.

However, after dredging and extraction of this raw material were banned in Vembanad Lake, the organisation has been struggling severely to survive.

This is mainly because:

1. The product has limited demand in the market.

2. The cost structure makes it difficult to compete with other organisations, resulting in very tight margins.

At present, there is no intake of new staff, and even the existing employees are finding it difficult to sustain themselves.

Why has the government not considered shifting these employees to other organisations and closing this unit after clearing the outstanding dues of retired staff and vendors? Governments are often reluctant to take such decisions, fearing that closing an industry during their tenure may negatively affect their vote base. However, why not look at it from another perspective—closing an industry that is no longer economically significant or viable?

Steel Industrials Kerala Limited (SILK)

SILK has a unit in Beypore known as the Ship Breaking Unit. At present, it does not carry out any ship breaking or manufacturing activities. The entire infrastructure that was once created for ship breaking has been lying idle. The unit has not been closed due to the fear that shutting down an industry may be perceived as a negative indicator of the state’s economic growth. Such assumptions are misguided. When operations are not viable, the Government must take a firm decision to revive, restructure, or transform the unit and move forward. Even those who oppose such actions often have personal views in favor of restructuring or transformation, but they do not openly support these ideas.

There are many other such examples. In business, the accepted principle is to close industries that are no longer viable or relevant under present market conditions and to move forward by exploring alternative options.

The fundamental purpose of a PSU is to generate revenue for the Government. As the owner of these PSUs, is the Government receiving adequate returns from these businesses?

The Government must rethink its approach to managing these businesses.

-----------------------------------------

To explore more topics on this blog,  Click Here

---o0o---

Note: The views expressed in this blog are entirely my personal opinions and do not represent the official stance or views of any organization or entity I am associated with. If any content here violates any rules or regulations of any nation, it will be promptly removed. For such concerns, please communicate them to 13hareesh13@gmail.com.