State Public Sector Undertakings

Most State PSUs in the country are in a financial mess and a range of reasons is responsible for their bad performance. Not all reasons apply to all PSUs. The reasons for underperformance vary depending on the product/service area of operation, the regulatory and political environment in which they operate, inability of management to strategically respond to changing scenario in the sector, subordination of organizational objectives to labour and public welfare.

 

A summary of CAG report on performance of West Bengal PSUs is given here.

As on 31 March 2017, there were 92 State Public Sector Undertakings (PSUs) in West Bengal which comprised of 73 working PSUs and 19 non-working PSUs. During 2016-17, the working PSUs registered a turnover of    INR 35,271.91 crore which was equal to 2.82 per cent of Gross State Domestic Product (GSDP). Further, the total turnover was 89.42 per cent of the aggregate investment (` 39,443.37 crore) in these working PSUs. They had employed 0.47 lakh employees as of March 2017. The return on equity of the working PSUs stood negative at 1.77 per cent. (Paragraph 1.1) Investments in PSUs as on 31 March 2017, total investment of the Government in 92 PSUs was ` 40,611.43 crores. Power sector accounted for 72.40 per cent of total investment in 2016-17.

 

During 2016-17, 21 PSUs earned profit of INR 621.59 crores, 11 PSUs incurred loss of INR 665.34 crores and one PSU incurred nominal loss. The total accumulated losses of 30 out of 73 working PSUs was INR   9,026.60 crores that exceeded their paid-up capital of INR 1,717.68 Crores.

 

 

CAG Audit of Government Companies of Andhra Pradesh submitted by CAG in 2018 shows that as on 31 March 2017, the State of Andhra Pradesh had 64 working Public Sector Undertakings (61 Companies and 3 Statutory Corporations) and 22 Nonworking Public Sector Undertakings (all       Companies), of which working Public Sector Undertakings employed 0.94 lakh employees. Working Public Sector Undertakings registered a turnover of INR 61,972.50 crores against investment of 61,345.31 crores in these companies. The Return on Equity of 60 Working PSUs exclusive to State and formed due to demerger was (-) 48.84 per cent based on latest finalized accounts as on 30 September 2017.

 

Of the 37 who had prepared their annual reports, se, 15 working PSUs earned a profit of INR 1,164.23 crores and 20 PSUs incurred a loss of INR 3,240.49 Crores. Nine out of 64 PSUs had accumulated losses of INR 25,367.89 crores. The huge accumulation of losses by these PSUs was             eroding public wealth, which is a cause of serious concern.

 

 

 

As per CAG report on Uttar Pradesh PSUs as on 31 March 2017, there are 103 PSUs in Uttar Pradesh, of which only 51 Government companies and six statutory corporations are working. The remaining 46 non-working PSUs are all Government companies. Out of 103 PSUs, only 40 PSUs finalised their accounts in the last three years, and 95 PSUs had arrears in accounts ranging from 1981-82 onwards. Delays/non-preparation of accounts are fraught with risk of misrepresentation of facts, fraud and misappropriation.

 

As per the latest finalized accounts of these 40 PSUs, 22 PSUs had earned a profit of INR 963.97 crores, 17 PSUs had incurred loss of INR 19,299.56 crores and the remaining one PSU had reported no profit or loss. The loss, if any, incurred by the remaining 63 PSUs (103-40) who have not finalized their accounts could not be assessed. These PSUs registered a turnover of   88,036.52 crores as per their latest finalized accounts as of 31 December 2017.

 

The 22 PSUs (PSUs in which the State Government has made investments) generated an average negative Return on Investment of 19 per cent on the investments made by the State Government. This remained well below the average cost of borrowings of 6.52 per cent during 2014-15 to 2016-17. Thus, the loss to the public exchequer as a result of the investment in the 22 PSUs as per their latest finalized accounts in the past three years (as on 31 December 2017) amounted to INR 11,920.32 crores.