19 loss-making CPSEs returned to profitability in FY21, government data shows

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Chennai Petroleum Corp Ltd (CPCL), Western Coalfields Ltd (WCL) and National Fertilizers Ltd (NFL) are among 19 central public sector companies (CPSEs) to bounce back from losses in fiscal 21, data out of the Public Sector Enterprises Survey 2020 show -21 shows.

Of the 19 PSUs belonging to industries such as refining, fertilizer, financial services, industrial and consumer goods, 8 CPSEs reported losses for the two consecutive fiscal years prior to fiscal 21.

The majority of CPSEs that turned loss to profit came from industrial and consumer sectors such as Sambhar Salts Ltd, Hindustan Salts Ltd, Andrew Yule & Company Ltd and Cement Corp of India Ltd, as these CPSEs spend are decreasing. Salt production units of Sambhar Salts Ltd have been able to take advantage of the favorable market conditions and accordingly salt prices have been increased which together with effective cost reduction measures contributed to better performance.

Strong growth in cement consumption amid the pandemic is believed to have helped Cement Corp of India Ltd post gains as the plentiful availability of labor in rural India supported growth in the construction of rural infrastructure and low-cost housing. Andrew Yule & Company Ltd reported an increase in tea net sales and foreign earnings.

However, despite reporting profits of over Rs 200 crore each, the CPCL, WCL and NFL all saw their overall earnings fall. The gain resulted primarily from lower expenses. CPCL reduced its total spending by 21 percent, NFL by 10.45 percent and WCL by 5.84 percent.

The FY20 Economic Survey advocated privatizing more CPSEs, noting that privatized CPSEs have outperformed their peers in terms of net assets, earnings, return on equity, return on investments (RoA), and revenue, among others. “ROA and net profit margin turned from negative to positive, outperforming peers, indicating that privatized CPSEs were able to generate more wealth from the same resources,” the survey reads.

The total gross revenue of 255 operational CPSEs in FY21 was Rs.24.26 trillion versus Rs.24.58 trillion last year, down 1.30 per cent. CPSEs in operation do not include CPSEs that are either under construction or in the process of liquidation or closure.

This decline in gross earnings in FY21 was largely due to a decline in petroleum (refining and marketing), transportation and logistics services, and crude oil CPSEs. At the sector level, the maximum share (65.43 percent) of gross income from operations in FY21 was attributable to the manufacturing, processing and generation sector, followed by services (25.75 percent), mining and exploration (8.77 percent) and Agriculture (0.05 percent).

Of the 255 operational CPSEs, 177 reported a net profit and 77 a net loss. Food Corporation of India reported no gain or loss.

The aggregate net profit of profitable CPSEs rose 37.53 per cent to Rs 1.9 trillion in FY21 compared to Rs 1.4 trillion a year earlier. Among the profitable CPSEs, the top five CPSEs accounted for 41.11 percent of the total net profit, including Indian Oil Corp Ltd., Bharat Petroleum Corp Ltd. and NTPC Ltd.

Total loss of loss-making power supplies fell 29.85 per cent to Rs.31,058 crore in FY21 from Rs.44,277 crore a year earlier. This decline in losses is mainly due to declines in loss at Bharat Sanchar Nigam Ltd (51.91 percent), Rashtriya Ispat Nigam Ltd (79.82 percent), Mangalore Refinery & Petrochemicals Ltd (92.31 percent) and Mahanagar Telephone Nigam Ltd (33 .38 percent).

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