Reinvigorating public enterprises
As pillars of our core economy, CPSEs need a holistic approach from the Centre for the improvement of their operations
The Modi government has been aggressively following anti-public sector policy in its second term. The premier public sector enterprises like ONGC, BPCL, NTPC and HAL are getting step-motherly treatment from the government and all focus of the Modi government advisers is on bringing about the dilution of shareholdings in the blue-chip PSEs and privatising the units ailing due to government policies.
In 2017-18, the number of profitable public sector enterprises (PSEs) stood at 184. These companies made a total profit of about Rs 1.59 trillion. The top 10 most profitable firms made a bulk of these profits. Their profit in 2017-18 amounted to Rs 98,707 crore or 61.8 per cent of the profit made by the profitable PSEs. In fact, the top five most-profitable companies made around 43.3 per cent of the total profit made by the state-owned profitable enterprises. The oil companies led by oil marketer Indian Oil Corp. made a bulk of the profit. The other big chunk came from the coal companies.
This trend of top 10 profitable PSEs brings in a bulk of the profit. This is a trend which plays out every year. A look at the data between 2010-11 and 2017-18 shows the profit of the 10 most profitable firms varied anywhere between 58 per cent and 64 per cent of the profit of the profitable PSEs. What this tells us is that it's not just the loss-making enterprises which are a problem. 174 of the 184 profitable firms contributed around 38 per cent of the profit in 2017-18.
The state-owned companies operating in sectors where there is fairly limited competition are the ones actually making money.
In 2005-06, when the competition in the telecom sector wasn't as cut-throat as it is now, BSNL was the second most profitable PSE. It made a net profit of Rs 8,940 crores. Following Jio's disruptive entry into the telecom space and the subsequent fall in data tariffs, BSNL was the largest loss-making PSE in 2017-18, with losses of Rs 7,993 crores. Mahanagar Telephone Nigam Ltd (MTNL), was the third-largest loss-making firm during the year, with losses of Rs 2,973 crore. The private operators came with many advantages which were denied to BSNL, MTNL.
The PSEs operating in the services sector had a net profit margin of 3.6 per cent in 2017-18. In comparison, PSEs operating in the mining and exploration space, where competition is limited, had a net profit margin of 18.2 per cent in 2017-18.
Total paid-up capital in 339 CPSEs as on March 31, 2018, stood at Rs 2,49,988 crore as compared to Rs 2,32,161 crore as on March 31, 2017 (331 CPSEs), showing a growth of 7.68 per cent. Total investment (financial) in all CPSEs was at Rs 13,73,412 crore as on March 31, 2018, compared to Rs 12,45,819 crore as on March 31, 2017, recording a growth of 10.24 per cent. Capital Employed in all CPSEs stood at Rs 23,15,707 crore on March 31, 2018, compared to Rs 21,66,801 crore in the previous year showing a growth of 6.87 per cent.
Total Gross Revenue from the operation of all CPSEs during 2017-18 stood at Rs 21,55,948 crore compared to Rs 19,55,675 crore in the last financial year showing a growth of 10.24 per cent. Total Income of all CPSEs during 2017-18 was at Rs 20,33,732 crore compared to Rs 18, 22,184 crores in 2016-17, showing a growth of 11.61 per cent. Profit of profit-making CPSEs (184 CPSEs) stood at Rs 1,59,635 crore during 2017-18 compared to Rs 1,52,978 crore in 2016-17, showing growth in profit by 4.35 per cent. Loss of loss incurring CPSEs (71 CPSEs) stood at Rs 31,261 crores in 2017-18 as against Rs 27,480 crore in 2016-17, showing an increase in loss by 13.76 per cent.
Overall net profit of all 257 CPSEs stood at Rs 1,28,374 crore compared to Rs 1,25,498 crore, showing growth in overall profit of 2.29 per cent. Reserves and surplus of all CPSEs stood at Rs 9,42,295 crore as on March 31, 2018, compared to Rs 9,20,981 as on March 31, 2017, registering an increase of 2.31 per cent. The net worth of all CPSEs went up from Rs 10,83,942 crore to Rs 11,26,782 crore showing an increase of 3.95 per cent. Contribution of CPSEs to Central Exchequer decreased from Rs 3,60,815 crore to Rs 3,50,052 crore, showing a decrease of 2.98 per cent. Foreign exchange earnings through exports of goods and services stood at Rs 86,980 crore in 2017-18 as against Rs 87,768 crore in 2016-17, showing a decrease of 0.90 per cent.
Foreign exchange expenditure on imports and royalty, know-how, consultancy, interest and other expenditure stood at Rs 4,96,581 crore in 2017-18 as against Rs 4,38,996 crore in 2016-17, showing an increase of 13.12 per cent. 10.88 lakh persons (excluding casual and contractual workers) were employed in 2017-18 compared to 11.35 lakh in 2016-17, showing a reduction in strength of employees by 4.14 per cent.
Salary and wages in all CPSEs stood at Rs 1,57,621 crore in 2017-18 against Rs 1,40,956 crore in 2016-17 showing a growth of 11.82 per cent. Total Market Capitalisation (M-Cap) of 52 CPSEs traded on stock exchanges of India is Rs 15,22,041 crore as on March 31, 2018, as compared to Rs 15,18,920 crore as on March 31, 2017, showing an increase of 0.21 per cent. M-Cap of CPSEs as a per cent of BSE M-Cap decreased from 12.50 per cent as on March 31, 2017, to 10.70 per cent as on March 31, 2018.
The CPSEs need a holistic approach from the centre for the improvement of their operations. They are the pillars of our core economy. But the sad part is that these CPSEs are being neglected at the hands of the current dispensation.
(Views expressed are strictly personal)
