After going in for strategic alliances between State public sector enterprises and Central PSUs with synergistic potential, the Kerala government is now working on merger of State PSUs engaged in similar lines of production to bring down overheads and achieve greater efficiency.

The government has already initiated measures to merge the Kerala State Industrial Products Trading Corporation with Travancore Titanium Products Limited. Accounts of both the companies for the year 2008-’09 are being finalised and the merger process is expected to be completed by the end of the current fiscal. Similarly, Sitaram Textile Mills and the Thiruvananthapuram Spinning Mills are being merged with the Kerala State Textile Corporation Limited.

The four subsidiaries of the Kerala State Electronics Development Corporation (Keltron) at Kannur—Keltron Component Complex Limited, Keltron Magnetics Limited, Keltron Crystals Limited and Keltron Resistors Limited—have already been merged into one. Efforts are also on to amalgamate various electrical and chemical companies and transfer part of the government equity in certain PSUs to other PSUs. The modalities for this are being worked out, government sources said.

Besides bringing down overheads, the mergers are also expected to improve better utilisation of technology and manpower and streamline and the marketing efforts of the PSUs. It is also the view in government that bigger entities would be able to better negotiate their way in the market. Initially, the merger would take place by way of acquisition or transfer of shares. The government is aware that this is a time-consuming process involving a lot of procedural formalities and the need to bring the trade unions on board.

The number of State PSUs has already come down from 44 in 2006 to 37. The ongoing merger drive would bring the number of PSUs further down. Of the 37 PSUs, 32 have become profitable, their combined turnover being Rs. 2,190.73 crores with a total profit of Rs. 239.75 crores during 2009-’10. Four of the loss-making units are in the textile sector and one in the electronic sector, their combined loss during the year being Rs. 6.45 crores. The State PSUs contributed Rs. 340.57 crores to the State exchequer by way of commercial taxes, excise duty and electricity charges during 2009-’10 and created 1,647 out of the 5,850 PSU jobs created over the last four years, the sources said.