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Thiruvananthapuram : Poor performance of many State Owned Enterprises (SOEs) is due to issues related to its governance, Kerala Industries Minister Elamaram Kareem said today.
Speaking at the International Conference on ''Resurgence of State Owned Enterprises - The Role of Ownership Policy and Governance Systems'' here, he said, ''The performance of SOEs has very less relation to the ownership structure. If they are properly managed and good governance principles are implemented there is no reason for bad performance. ''I am not denying the importance of the political stand of the governments and its transcendental status. But in a political set up where the State is interested to protect the SOEs, there must be good governance practices,'' he opined.
''Unless these practices are adopted even the political governments will not be a position to protect them in long run,'' he added.
''This is what happened in Kerala. We have the largest number of SOEs due to various historical reasons. But, I must admit that many of such enterprises were not properly managed,'' he said.
Even many companies in the manufacturing sector were badly performing and they were maintained and protected solely for political reasons, he added. ''On two occasions, consultants were appointed to develop a strategy for the revival of the sector. But, both the times the advise was either to close down or privatise the units,'' he felt.
When this LDF government came to power in 2006, it was declared that the government would not privatise the SOEs, but would resort to such strategic initiatives to revive them, he said.
In 2005-06, out of the total 42 PSUs under the Industries Department, 30 were making losses.
The total loss during that year was Rs 70 crore, he said.
But in 2009-10, this loss was transformed into a profit of Rs 240 crore. The number of loss making companies has come down to five.
They also will be profitable in this financial year, he added.
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Speaking at the International Conference on ''Resurgence of State Owned Enterprises - The Role of Ownership Policy and Governance Systems'' here, he said, ''The performance of SOEs has very less relation to the ownership structure. If they are properly managed and good governance principles are implemented there is no reason for bad performance. ''I am not denying the importance of the political stand of the governments and its transcendental status. But in a political set up where the State is interested to protect the SOEs, there must be good governance practices,'' he opined.
''Unless these practices are adopted even the political governments will not be a position to protect them in long run,'' he added.
''This is what happened in Kerala. We have the largest number of SOEs due to various historical reasons. But, I must admit that many of such enterprises were not properly managed,'' he said.
Even many companies in the manufacturing sector were badly performing and they were maintained and protected solely for political reasons, he added. ''On two occasions, consultants were appointed to develop a strategy for the revival of the sector. But, both the times the advise was either to close down or privatise the units,'' he felt.
When this LDF government came to power in 2006, it was declared that the government would not privatise the SOEs, but would resort to such strategic initiatives to revive them, he said.
In 2005-06, out of the total 42 PSUs under the Industries Department, 30 were making losses.
The total loss during that year was Rs 70 crore, he said.
But in 2009-10, this loss was transformed into a profit of Rs 240 crore. The number of loss making companies has come down to five.
They also will be profitable in this financial year, he added.
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