Govt. working on closing loss-making firms like BSNL, MTNL, Air India

The Government is working out on proposals to shut down some loss-making state-owned companies. The central government still owns about 260 firms and thousands more at the state level, involved in activities ranging from generating nuclear power to making condoms.

On Tuesday, Cabinet Secretary Ajit Seth had called a meeting of top officials to consider what to do with the 10 firms that make the biggest losses. They had a combined net loss of Rs 245 billion ($4 billion) in 2012/13.

The list includes Bharat Sanchar Nigam, Mahanagar Telephone Nigam, Air India, Hindustan Photofilms and Hindustan Fertilisers Corporation, according to a note prepared by the Department of Public Enterprises. Officials at the department have drawn up proposals to close some.

They include Hindustan Photofilms, a company set up in 1960 to make film rolls and take on the likes of Kodak but declared a sick company in 1996 and recommended for closure by the department in 2003 on the grounds that it could not compete with private players.

The company, based in the southern town of Ottacamund in the Nilgiri hills, went to court and won a stay order on any further proceedings that could lead to its closure.

In 2010 the firm proposed a recovery plan but the government has been sitting on it, with no decision having been made since about the company's future. In the meantime the company's accumulated losses have piled up to 82.32 billion rupees, about 40 times its paid-up capital.

The government is also considering a proposal to wind down the watch-making division of HMT Machine Tool Limited after years of losses that have forced it to borrow from the government to pay wages.