19 loss-making CPSEs returned to profit in FY21, shows govt data

Chennai Petroleum Corp Ltd (CPCL), Western Coalfields Ltd (WCL), and National Fertilisers Ltd (NFL) are among the 19 central public sector enterprises (CPSEs) that returned to profit in FY21 from loss, data from the Public Sector Enterprises Survey 2020-21 shows.

Of the 19 PSUs belonging to industries such as refinery, fertilisers, financial services, industrial and consumer goods, 8 CPSEs reported losses for the two consecutive financial years preceding FY21.

The majority of CPSEs returning from loss to profit was from industrial and consumer goods sectors such as Sambhar Salts Ltd, Hindustan Salts Ltd, Andrew Yule & Company Ltd, and Cement Corp of India Ltd. There was an increase in turnover and revenue backed by a fall in the expenditure of these CPSEs. The salt manufacturing units of Sambhar Salts Ltd were able to leverage the favourable market conditions and accordingly the salt prices were increased which along with effective cost-cutting measures contributed to better performance.

Strong growth in cement consumption amidst the pandemic is believed to have helped Cement Corp of India Ltd make a profit as abundant labour availability in rural India aided growth in the construction of rural infrastructure and low-cost housing. Andrew Yule & Company Ltd saw an increase in the net sales of tea and foreign earnings.

However, despite reporting profits over Rs 200 crore each, CPCL, WCL, and NFL registered a fall in their total revenue. The profit was mainly on account of reduced expenditure. CPCL reduced its total expenses by 21 per cent, NFL by 10.45 per cent and WCL by 5.84 per cent.

Making a case for the privatisation of more CPSEs, the FY20 Economic Survey mentioned that 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 said.

The total gross revenue of 255 operating CPSEs during FY21 was Rs 24.26 trillion as against Rs 24.58 trillion in the previous year, showing a decrease of 1.30 per cent. Operating CPSEs do not cover those CPSEs either under construction or liquidation or closure.

This decline in gross revenue in FY21 was largely due to a decline in the petroleum (refinery & marketing), transport & logistics services & crude oil CPSEs. At the sector level, the manufacturing, processing & generation sector accounted for the maximum share (65.43 per cent) of gross revenue from operations in FY21, followed by services (25.75 per cent), mining & exploration (8.77 per cent), and agriculture (0.05 per cent).

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

The aggregate net profit of profit-making CPSEs rose by 37.53 per cent to Rs 1.9 trillion in FY21 compared to Rs 1.4 trillion in the previous year. Among the profit-making CPSEs, the top five CPSEs accounted for 41.11 per cent of aggregate net profit comprising Indian Oil Corp Ltd., Bharat Petroleum Corp Ltd., & NTPC Ltd.

The aggregate loss of loss-making PSUs declined by 29.85 per cent to Rs 31,058 crore in FY21 as against Rs 44,277 crore in the previous year. This reduction in loss is mainly due to a decline in a loss in Bharat Sanchar Nigam Ltd (51.91 per cent), Rashtriya Ispat Nigam Ltd (79.82 per cent), Mangalore Refinery & Petrochemicals Ltd (92.31 per cent), and Mahanagar Telephone Nigam Ltd. (33.38 per cent).