Sikkim govt to lease out state-owned SITCO

Gangtok, Mar 11: The Sikkim government is contemplating to lease out the ailing state-owned Sikkim Time Corporation Ltd(SITCO) to a private entrepreneur to revive the company.

The state Minister for Commerce and Industries R B Subba told sources that a Cabinet Sub-Committee has been constituted and asked to submit a report on the company after assessing all aspects. A decision would be taken only after the cabinet sub-committee submitted its report, the minister said.

SITCO was set up in 1976 in technical collaboration with the Hindustan Machine Tools(HMT) for assembling watches.

It diversified its activities and expanded its operations into four units and paid Rs 26.80 crore in form of dividends, duties, advertisements and taxes, both to the state and the Centre.

But the company suffered lossess during the last five years. A recent report prepared by the Commerce and Industries department attributed the loss to tough competition from organised sector, availability of cheap Chinese watches, lack of promotional activities and rise in the wages of casual labourers.

Insufficient loading by collaborates and non-availability of working capital were the reasons cited in the report for the loss suffered by the company.

The company was forced to shut down two of its four units and offered VRS to 114 out of its total 249 employees. Even after the VRS, the total monthly salary of the employees stood at Rs 10 lakh against the montly turnover of Rs 3.79 lakh. The total turnover for 2004-05 was reduced to Rs 107.37 lakh from Rs 239.51 lakh in the previous year as the units operated on lower productivity levels.

Since July 2005, the company has not been able to garner enough resources to pay salary to its employees and resorted to short-term loan from the bank.

In addition to it, SITCO has a bank loan of Rs 6.59 crore which attracts a monthly interest of Rs 7 lakhs.

The report suggested the government four options to deliberate and take suitable action at an early date to arrest the situation from deteriorating further.

The government, the report suggested, should either revive the company with its available resources or look for joint ventures.

The two other options offered were--the government should consider for the sale of the company to private company or closed down the company and utilise its assests for other purposes.

UNI