Implementation of the Winding up Process

The Punjab Government had decided to close down six PSUs namely PFNC (Yoc-1991) PUNTEX (Yoc-1991), KNITWEAR (Yoc-1997), LEATHERA (Yoc-1999), PUNWAC(Yoc-2001) and PPDC(Yoc-2001). Even though two of the Corporations were closed nearly a decade ago, the winding up process has not been completed, as the concerned Administrative Departments have not taken up the task in right earnest. Almost all the Corporations are keeping a skeleton staff to complete the accounting formalities required for the winding up process and to deal with the legal / arbitration cases. For want of timely closure, much avoidable expenditure has been incurred on the staff kept by the closed Corporations. Even the assets of these closed Corporations have not been disposed of and the matter is lingering on without reason. Taking note of the above situation, the Core Group constituted by the State Government at its meeting with the Commission decided to entrust the task to the Commission to get a legal frame work of The Punjab State Asset Management Authority prepared. The winding up process and disposal of the assets would be accomplished with expedition by such an Authority with a better result.

So far, the Commission has examined 29 PSUs, 9 ACIs, 11 subsidiaries and 6 closed PSUs and these fall under the jurisdiction of 17 Administrative Departments and are incorporated under 22 different Acts & Bye-laws. In case, the recommendations of the Commission are left to each of the Administrative Departments for implementation, the very purpose of setting up of the Commission to expedite the disinvestment process may be defeated.
The difficulties faced in the process of winding up of the six Corporations are non-preparation of accounts and its finalization up to CAG level; expeditious finalization of arbitration / legal / tax cases; and the disposal of
their assets to meet the liabilities / obligations. In some of the cases, the grants received from Central Government for specific infrastructures stood unutilized. The process of OTS for squaring up the loan portfolios with the financial institutions / banks has not been resorted to. Separate write-ups for each of the closed PSUs confirm the above position.

Punjab Film & News Corporation Limited
(PFNC)
Punjab Film & News Corporation Limited was incorporated under the Companies Act 1956 in 1973 with the paid-up capital of Rs.2.00 crore to promote the film industry through establishment of cinema houses in rural area of the State. Pursuant to this, PFNC constructed 8 Cinema houses in 1974-75 and made these operational in 1975-76. It also produced a telefilm. Its performance was reviewed by the High Powered Committee in 1991. Keeping in view the
entertainment scope of T.V & video, the prospects of these cinema houses were found to be bleak. A decision was taken to wind up the Corporation on 06.05.1991. Consequently, 7 cinema houses have been sold. The part amount of
sale consideration of the 8th cinema has been received but its sale is subject to the decision of the pending court case.After examining the facts placed before the Commission, it recommends the following actions to be initiated by the Administrative Department till the ‘Punjab State Asset Management Authority’ comes into being:

1.Pending Balance Sheets & Profit & Loss Accounts be prepared expeditiously by engaging the service of a Chartered Accountant.
2.CAG should be approached for completion of audit of the pending Balance Sheet.
3.Advocate General & District Attorneys should be approached for finalization of pending legal cases. Efforts be also be made to settle these out of Court, if possible.
4.The approach of cleaning the Balance Sheets should be followed to complete the winding up process of the Corporation by getting its name struck off from the Register of Registrar of Companies.