A total of 19 central public sector enterprises (CPSEs) returned to profit-making businesses in the financial year 2020-21. The companies were in losses before that, according to a media report. The CPSEs include National Fertilisers Ltd (NFL), Chennai Petroleum Corp Ltd (CPCL) and Western Coalfields Ltd (WCL).
Out of the 19 CPSEs belonging to industries such as refinery, fertilisers, financial services, industrial and consumer goods, eight reported losses for the two consecutive financial years preceding FY21, the Business Standard report said attributing data from the Public Sector Enterprises Survey 2020-21.
It also said most companies returning to the black belong to industrial and consumer goods sectors. They include Andrew Yule & Company, Hindustan Salts, Sambhar Salts and Cement Corp of India. The companies witness a rise in turnover and revenue backed by a fall in expenditure.
The report said that the profit of these CPSEs was mainly on account of a fall in expenditure as the companies also saw a decline in their revenues. CPCL, WCL, and NFL registered profits over Rs 200 crore each. CPCL reduced its total expenses by 21 per cent, NFL by 10.45 per cent and WCL by 5.84 per cent.
The Economic Survey 2019-20, while making a case for the privatisation of more CPSEs, said privatised CPSEs have performed better than their peers in terms of net worth, profit, return on equity, return on assets (RoA), and sales, among others. “The ROA and net profit margin turned around from negative to positive surpassing that of the peer firms which indicates that privatised CPSEs have been able to generate more wealth from the same resources,” the Survey had said.
The BS report said the total gross revenue of 255 operating CPSEs during FY21 stood at Rs 24.26 lakh crore as against Rs 24.58 lakh crore in the previous year, which indicates a decrease of 1.30 per cent. Operating CPSEs do not cover those CPSEs either under construction or liquidation or closure.
In Union Budget 2021, the Centre had announced a target of Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSU banks and one insurance company in FY22. Following this, in May 2021, the Union Cabinet gave its approval for the strategic divestment and transfer of management control in IDBI Bank.
Before this, on December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a qualified institutional placement.
The government owns a 45.48 per cent stake in IDBI Bank, while Life Insurance Corporation (LIC) owns 49.24 per cent controlling stake in the lender. In 2019, the state-owned life insurer infused Rs 21,624 crore into the bank. LIC is currently the promoter of IDBI Bank with Management Control and the government is the co-promoter.