Unit 5
State Level Public Enterprises
Q1) What do you mean by State level public enterprise?
A1) State level public enterprise is an important segment of the public sector enterprise in India. They are vital instruments of public policy for the states. There has been a spectacular growth in the number of these enterprises and the investment in them since the 50s. However, their financial record has been utterly disappointing. At a time when the state governments are facing a severe resource crunch, it is of great interest to know how these enterprises have been performing in respect of the return on investment. No reform programmed can succeed unless the SLPEs turn the corner to become financially viable and only such enterprises in the SLPEs portfolio which are high on social purpose. It is therefore essential to study their financial record and the related aspects.
Q2) Explain the origins of State level public enterprise.
A2) The SLPEs owe their existence more to historical factors and pragmatism then ideological considerations. A large number of the SLPEs came into being on account of historical necessity, in that, the erstwhile princely states were owning them prior to the formation of the present states of the Indian Union. Many of the present SLPEs were born on the account of decisions of the state governments to wind up their departmental economic activities and organize them in the form of autonomous units. A large number of these enterprises were set up as public organizations to take advantage of institutional funding from the long-term financial institutions and development banks as these institutions do not extend financial support, as a policy measure to the government departments. Many SLPEs were set up in pursuance of the enactments legislated by the central governments to make the state of the Indian union partners in propelling such activities and evolving a uniform framework for the control and implementation of policies in respect of such sectors. A large chunk of the SLPEs have been set up to undertake promotional activities to provide infrastructural and institutional support for the developmental activities by the states. An important component of the SLPEs in this category relates to the welfare corporations which have come up almost in all the states following the all-India pattern.
Finally, a considerable number of these enterprises have seen the light of the day on account of the decisions of the various state governments to assume the entrepreneurial responsibilities.
Q3) Give the structure of State level public enterprise.
A3) Managing public sector efficiently in order to deliver these objectives could itself be a very onerous task. Hence, the organizational structure of the public enterprises had to be designed in a suitable manner, which could enable the public enterprise to perform under the overall guidance and patronage of the government, while at the same time be autonomous enough to carry out activities which would ensure that the economic goals set for it could be achieved successfully. As time went on, public sector enterprises increased in number and took on more and more responsibilities. Sick private industries were also taken over by Government and converted into public sector enterprises, obviously to safeguard employment. This increased the role of the public sector from managing infrastructure industries which had virtual monopoly to managing industries which were sick and in the competitive fields. Hence, the organizational structures for public sector enterprises underwent changes with changes in portfolios. Since 1991, when the liberalization movement started in India, areas reserved for the public sector have come down drastically. Prior to July 1991, 17 industries were reserved for the public sector. After July 1991, this list had been pruned to merely 8 and from December 2002, only three industries are reserved for the public sector. Hence, this measure has consequently opened up erstwhile reserved areas for competition and caused challenges to the public sector competence/performance. After 1991, disinvestment of government equity in selected public sector enterprises has also brought in a certain amount of fiscal discipline in these enterprises. Listing in stock markets has also brought about changes in the way the public sector managements think. From the year 2000, offloading of major portion of equity to private entrepreneurs has brought in a totally new dimension to public sector management. All these changes have been reflected in the organization structure of these enterprises and their ability to face competition. Experience of industrially developed countries has shown that performance of an organization, whether in the public sector or private sector, has largely dependent on the leadership of the chief executive officer and he, in turn, cannot be successful unless he is backed by a very professional and competent board of directors. Since public enterprises have to deal with delicate questions of policy which affect the stability, self-reliance and integrity of the country, their boards of directors play a very crucial role. Unless the governing board has several members, who are not only competent but also wise, the organization is bound to suffer. The effectiveness of the management board of directors is crucial not only to the success of the public sector enterprise but also to the future of the country.
Effectiveness of the management boards depend not only on the competence of the members but also on the extent of trust reposed in them by the owner of the enterprise, viz. The government. This is ensured by adequate delegation and decentralization of authority and non-interference in the day-to-day affairs of the company by government. There should be clear enunciation of the level of authority that the board would have along with accountability for their performance. Frequently, Government has been seen to interfere in petty matters such as postings and transfers of staff of the enterprise, grant of licences/sanctioning of tenders etc. Government nominees on the boards of public sector enterprises attend meetings without adequate brief and frequently stall decisions in the board or get the matters referred to government for decision. Many public enterprises have suffered since timely decisions could not be taken in the board meetings.
Q4) Explain the composition of Board.
A4) The management of administration of public enterprises has been entrusted to governing boards, which enjoy wider responsibilities than the boards of private sector enterprises. For instance, they are entrusted with responsibilities towards consumers, employees, Government, Parliament and the Nation. These boards are expected to formulate policies for running the enterprise and to work towards the achievements of objectives that have been laid down by various statutes from time to time. The boards also ensure that the policies of concerned public enterprise conform to the overall government approach and policies in various matters. Hence, the success or failure of an enterprise depends upon the proper and careful composition of the Board. Shri A.D. Gorwala has rightly observed that “whatever the form, without suitable men at the highest level of management-the governing board or board of directors the likelihood of success is very little. Negatively, the composition should not be such as to obscure the essential condition of autonomy. It should not give rise to overlapping of responsibility or lead to introduction of control and interference by the back door. Positively, the composition of the Board should be such as to subserve only one purpose, that is, good and efficient direction in the public interest.” Mr. Herbert Morrison had also rightly observed that the Board should be composed of the best brain that we can secure” and for this “we must insist upon all the members being persons of business ability and capacity.” In India, there is generally a paucity of competent managerial personnel. Therefore, there is a tendency to appoint civil servants as members of the boards of public enterprises. In addition, certain non-officials drawn from different walks of life are also given representation on the management boards as they bring in vast experience of business, accounting and management. The Estimates Committee has criticized the practice of appointing civil servants as official members, since “the agenda is run through each officer giving his department’s point of view and then hurrying back to the post of duty.” This bureaucratic approach to the organizational and functional problems defeats the very purpose of constituting a company. The Estimates Committee, therefore, recommended that “keeping in view the tasks to be performed and the requirements thereof, members of the Board of Directors might be drawn from a wide sphere than that at present and more technical experts, experienced men from public life and from various non-official sources be appointed on the board, though care would have to be taken that no one with a direct interest in the same industry in private sector is appointed.” Mr. Khera, who had a long experience in civil as well as industrial administration, has, however, been in favour of the appointment of official directors on the boards of public enterprises. According to him “the appointment of officials on the board of directors tends to secure for Government companies the same control and community of interest which private companies attain through the appointment of members of the family on their boards of management.” The presence of official directors on the board provides the vital link between the Government, which is responsible for the overall performance of the enterprise, and the management, which is responsible for running the enterprise and dealing with its day-to-day administration. This arrangement also ensures coordination between the Government and the enterprise. This link can be used as a two-way communication channel in explaining the policies of the Government to the Board and conveying to Government the problems of the Board and its requirements. Many such official members also facilitate horizontal coordination between several such enterprises by virtue of their being a member on these enterprises. Prof. Robson is not particularly enthused with members of the board being drawn from various interest groups. He observes “A director who thinks that he is on the Board to represent a particular interest is bound to consider that he is an advocate of that interest and this cannot but affect adversely the harmonious functioning of the Board.”
Q5) Explain the sectoral aspects of SLPE’s.
A5) State PSUs have been divided into six categories for the purpose of this study viz. Manufacturing, trading & services, financial, promotional, welfare and utility enterprises. The sectoral analysis incorporating the financial dimensions presents an interesting account of the functioning of the State PSUs. This analysis includes the typography, total investments, total revenues earned, net profit and net worth of these enterprises. State PSUs of Arunachal Pradesh could not be included in the analysis as, in the absence of details, it was not possible to categorise them according to the 6-fold classification.
The Typography –
Of the total 747 State PSUs for which information is available, about 43 per cent belong to the manufacturing category while about 22 per cent are promotional enterprises. About 9 per cent belong to the trade and services category 7 per cent each to the financial and welfare categories. Utilities account for the balance 12 per cent of enterprises. It is evident that the manufacturing enterprises followed by the promotional enterprises dominated the scenario. This was because the various State Governments emulated the Central Government in giving a fillip to industrialisation. The trading and services enterprises received an encouragement to provide export thrust and create a suitable infrastructure of services at the State level. The promotional enterprises were set up to orient social activities with an economic tinge at the State level. The welfare enterprises were a new breed of the State PSUs set up to provide economic support to the backward classes of society, comprising scheduled castes, scheduled tribes, minorities, women and handicapped. The utility enterprises had their presence in each major State. These comprised the State Road Transport Corporations and the State Electricity Boards and, in some cases, unbundled State power utilities-generation companies/transmission companies/ distribution companies.
Total Investments
The total investments in all the State PSUs taken as a whole grew from Rs.77729.79 crore in 1990-91 to Rs.197053.77crore in 1998-99. The financial sector enterprises saw an increase of investments from Rs.16864.43 crore to Rs.31293.77crore followed by Rs.8524.73crore to Rs.21219.45crore in manufacturing State PSUs during this period. The promotional enterprises saw their investments increasing from Rs.2991.71crore in 1990-91 to Rs.17941.92crore in 1998-99. In case of trading and services, welfare and utility State PSUs, investments in this period increased from Rs.816.27 crore to Rs.2367.38 crore, Rs.285.42 crore to Rs.1347.08 crore and Rs.48247.23 crore to Rs.122884.17crore respectively. Category-wise distribution of total investment in State PSUs in the years 1990-91 and 1998-99 is indicated in Fig.4.9. 4.27 It is clear that the promotional, welfare, trading & services and utility State PSUs registered a higher rate of growth as compared to the financial and manufacturing State PSUs. This trend reflected the increasing emphasis being placed on the welfare’ role of the State over time.
Net Profit
The net profit position of the State PSUs assuring 1990-91 to 1998-99,excepting 1994-95 and 1995-96, these enterprises incurred losses during all the other years. However, it is interesting to note that some sectors such as financial, trading & services and welfare enterprises (excepting for 1990-91), earned profits all through. Promotional enterprises have shown mixed performance. The manufacturing and utility (excepting in 1994-95) categories of enterprises incurred losses consistently. The utility enterprises were major loss makers. This contradicts the general perception that all State PSUs are in losses. Further, it goes against the belief that welfare and promotional State PSUs are necessarily loss-making propositions. Category-wise distribution of net profits in State PSUs in the years 1990-91 and 1998-99.
Total Revenue Earned
It is the relationship between total investment and total revenue earned by the State PSUs under different categories. For the year 1998-99, the turnover was 0.16 times in the case of financial enterprises, 0.74 times for manufacturing State PSUs, 0.21 in the case of promotional enterprises, 5.24 for trading and services enterprises, 0.39 times in the case of welfare enterprises and 0.60 times for utility enterprises. Though strictly inter-category comparison is not possible, it could be said that enterprises in all the categories had a vast scope of improvement.
Net Worth
The net worth of the enterprises in all the categories taken together increased from Rs.14555.36 crore in 1990-91 to Rs.53564.56 crore in 1998-99. During this period, the total investment increased from Rs.77729.79 crore in 1990-91 to Rs.197053.77 crore in 1998-99. This signifies considerable erosion in the use of investment, from 5.34 times in 1990-91 to 3.68 times in 1998-99.
Q6) Explain the performance of Andhra Pradesh on Public enterprises.
A6) The PSUs constitute an important segment of the economy of Andhra Pradesh. The State Government has furnished information in respect of 40 enterprises having total investment of Rs.28475.28 crore in 1999-00. The total investment comprised of Rs.5242.49 crore of Equity and Rs.23232.79 crore of Debt. State equity has increased at a compound rate of 23.60 per cent per annum during the 1990s, with the result that the share of state equity in total equity increased from 76 per cent in 1990-91 to 83 per cent in 1999-00. However, the share of state debt in total debt has fallen from 40 per cent to 23 per cent over the corresponding period. There has been a significant improvement in the debt-equity ratio of these enterprises during 1990's, from 6.15 in 1990-91 to 4.43 in 1999-00.
Total revenue earned by these enterprises amounted to Rs.22775.42 crore while their accumulated losses were Rs.1689.37 crore in 1999-00. Accumulated losses as a percentage of capital employed have not shown any consistent trend and were 6 per cent in 1999-00. Similarly, there has been no clear trend in the rate of return earned by these enterprises. After reaching a peak of 9.23 per cent in 1997- 98, the rate of return yielded by these enterprises has declined to 6.2 per cent in 1999-00. Six of the 40 enterprises have been consistent net profit makers while seven enterprises have been consistent loss makers.
The State enterprises operate in production / manufacturing (18), promotional / development (12), trading / marketing (4), service utility (3), financial services (2) and welfare (1) sectors. In 1999-00 the bulk of the investment in public enterprises was in the utilities (65 per cent) and manufacturing (28 per cent). However, manufacturing enterprises accounted for around 68 per cent of the accumulated losses while for utilities the corresponding figure was 18.5 per cent. Category-wise accumulated losses of PSUs in 1999-00. During 1990-91 to 1993-94 dividends were given only by financial enterprises. Since 1994-95, dividends have been declared by manufacturing enterprises only, with one enterprise from trading and services category giving dividends in 1999-00.
Q7) Explain the performance of Arunachal Pradesh on Public enterprise.
A7) The State Government has furnished information in respect of 4 enterprises having total investment of Rs.50.26 crore in 1997-98. The total investment comprised of Rs.9.22 crore of equity and Rs.41.04 crore of debt. The share of state equity in total equity has remained around 97 per cent. The debt-equity ratio of these enterprises has fluctuated between 4.2 and 5.2 during the 1990s. 6.6 Total revenue earned by these enterprises amounted to Rs.21.72 crore while their accumulated losses were Rs.20.46 crore in 1997-98. The net profits recorded by these enterprises were positive excepting in 1990-91 and 1997-98.
Q8) Explain the performance of Assam in public enterprise.
A8) Besides being the largest State in the North-East, Assam also has the largest number of PSUs in that region of the country. PSUs in Assam were established to exploit its natural resources, provide employment, and take up welfare-oriented activities. 6.8 The State Government has provided information in respect of 42 enterprises. Total investment in these enterprises increased at 6.14 per cent per annum during 1990s to reach Rs.3680.19 crore in 1998-99. Total investment in 1998-99 consisted of Rs.1756.65 crore of equity and Rs.1923.54 crore of debt implying a Debt: Equity ratio of 1.1. State equity accounted for as much as 99 per cent of total equity in these enterprises. The Debt: Equity ratio has moved within a narrow range during 1991-92 to 1998-99.
Total revenue earned by these enterprises amounted to Rs.950.29 crore while their accumulated losses were Rs.3110.02 crore in 1998-99. The accumulated losses have increased at compound annual growth rate of 17.19 per cent during 1990s to reach Rs.3110.02 crore in 1998-99 which is among the highest in the country. The sustained increase in accumulated losses. Accumulated losses as a percentage of capital employed have increased to reach 92.76 per cent in 1998-99. In contrast, the Net worth of these enterprises was (-) Rs.1231.18 crore in 1998-99. Moreover, the net profits of these enterprises have been negativing throughout the period under study and touched a low of almost (-) Rs.600 crore in 1998-99, fourth from the bottom in the country. The rate of return yielded by these enterprises turned negative in 1996-97 and was (-) 4.32 per cent in 1998-99. Two enterprises have been consistent net profit makers while six enterprises have been consistent loss makers.
The State enterprises operate in production / manufacturing (22), promotional / development (9), trading / marketing (2), service utility (3), financial services (2) and welfare (4) sectors. In 1998-99 the bulk of the investment in public enterprises was in the utilities (83 per cent). Manufacturing and financial enterprises accounted for around 6 per cent each in total investment. However, utilities accounted for 88 per cent of the accumulated losses while the corresponding figures for manufacturing and financial enterprises were 5 and 4 per cent respectively.
Q9) Explain the performance of Goa in public enterprise.
A9) The State Government has furnished information in respect of 13 enterprises having total investment of Rs.594.11crore in 1997-98. The total investment comprised of Rs.312.99 crore of Equity and Rs.281.12 crore of Debt. State equity has increased at a compound rate of around 18 per cent per annum during the 1990s. The share of State equity in total equity increased till 1993-94 and since then declined to reach 61 per cent in 1997-98. The share of State debt in total debt has remained at a low level. The debt-equity ratio of these enterprises has remained below one throughout the period of the study. Total revenue earned by these enterprises amounted to Rs.120.24 crore while their accumulated losses were Rs.49 crore in 1997-98. Accumulated losses as a percentage of capital employed have not shown any consistent trend and were 8.5 per cent in 1997-98. Similarly, there has been no clear trend in the rate of return earned by these enterprises. After reaching a peak of 9.24 per cent in 1994-95, the rate of return yielded by these enterprises has declined to almost 6 per cent in 1997- 98. Four of the 13 enterprises have been consistent net profit makers. 6.17 The State enterprises operate in sectors such as production / manufacturing (6), promotional / development (4), service utility (1), financial services (1) and welfare (1) sectors. In 1997-98 the bulk of the investment in public enterprises was in the welfare (46 per cent) and promotional enterprises (39 per cent). However, manufacturing enterprises accounted for 28 per cent of the accumulated losses while for utilities the corresponding figure was 43 per cent. Welfare enterprises accounted for another 29 per cent of the accumulated losses. During 1990-91 to 1994-95 87 dividends were given only by promotional enterprises. Since 1994-95, dividends have also been declared by the manufacturing enterprises.
Q10) Explain the performance of Gujarat in public enterprise.
A10) The PSUs in Gujarat were perceived as catalysts for economic development for achievement of specified socio-economic objectives. Some of the PSUs were set up to ensure regular supply of goods and services, provide public goods, encourage sectoral development, take over sick units and promote entrepreneurship.
The State Government has provided information in respect of 37 enterprises. However, figures pertaining to the Sardar Sarovar Narmada Nigam have been excluded from analysis as the project is still under implementation and its inclusion would have distorted the overall picture of the state public enterprises in Gujarat. Thirty-six enterprises had total investment of Rs.11506.78 crore in 1997-98, indicating a compound annual growth of 8.42 per cent during the 1990s. The total investment comprises of equity of Rs.1391.88 crore and debt of Rs.10114.90 crore. State equity continues to dominate the equity capital of public enterprises although there has been a small decline in its importance during the 1990s. State equity constituted 87 per cent of total equity capital of public enterprises in 1997-98. There has been a similar decline in the share of State debt in total debt of State PSUs. The debt: equity ratio has declined from 12.99 in 1990-91 to 7.27 in 1997-98. However, it continues to be high. 6.20 Total revenue earned by these enterprises amounted to Rs.9949.92 crore while their accumulated losses were Rs.943.48 crore in 1997-98. Accumulated losses as a percentage of capital employed have fluctuated within a narrow range of 5.8 to 7.1 per cent. The rate of return yielded by these enterprises has not exhibited any clear trend and was 8.91 per cent in 1997-98. Dividends yielded by these enterprises have also been fluctuating and reached a peak of Rs.26.86 crore in 1997-98. Seven enterprises have been consistent net profit makers while five have been consistent loss makers.
The PSUs operate in production / manufacturing (9), promotional / development (12), trading / marketing (4), service utility (3), financial services (5) and welfare (3) sectors. In 1997-98 the bulk of the investment in public enterprises was in the utilities (64 per cent) and financial (28 per cent) sector. Manufacturing enterprises accounted for only 3 per cent of total investment in public enterprises. 88 Utilities accounted for 73 per cent of the accumulated losses while promotional and manufacturing enterprises accounted for 17 per cent and 9 per cent respectively of accumulated losses in 1997-98. There are three enterprises that have given out dividends consistently during the period under consideration. Dividends have been given out primarily by the financial and manufacturing enterprises.
Q11) Explain the performance of Haryana in public enterprises.
A11) The State Government has provided information in respect of 22 enterprises. Information in respect of the State Electricity Board has not been furnished. Moreover, Haryana Roadways is a Departmental Undertaking and hence does not figure in the list of State PSUs. Investment in these enterprises amounted to Rs.927.19 crore in 1998-99 comprising Rs.225.69 crore of equity and Rs.701.50 crore of debt implying a Debt: Equity ratio of 3.11. The State Government is the dominant equity holder in these PSUs, accounting for 84 per cent of total equity in 1998-99. The share of State debt in total debt has shown a steep decline, from 37 per cent in 1990-91 to 6 per cent in 1998-99. The Debt: Equity ratio has remained within a narrow range.
Total revenue earned by these 22 enterprises amounted to Rs.608.00 crore while their accumulated losses were Rs.167.07 crore in 1998-99. Accumulated losses as a percentage of capital employed as well as net worth have declined over the decade. The rate of return yielded by these enterprises was 10.56 per cent in 1998- 99. Three enterprises have been consistent net profit makers while one enterprise has been making consistent losses. Two enterprises have declared dividends throughout the period under study.
The PSUs operate in production / manufacturing (7), promotional / development (5), trading / marketing (7), financial services (1) and welfare (2) sectors. Financial and manufacturing enterprises dominate the scene, accounting for 44 per cent and 33 per cent respectively of total investment. Promotional enterprises, however, account for 63 per cent of accumulated losses while having only 6 per cent of total investment. Manufacturing and financial enterprises account for 20 and 9 per cent respectively of accumulated losses.
Q12) Explain the effectiveness of management.
A12) Effectiveness of the management boards depend not only on the competence of the members but also on the extent of trust reposed in them by the owner of the enterprise, viz. The government. This is ensured by adequate delegation and decentralization of authority and non-interference in the day-to-day affairs of the company by government. There should be clear enunciation of the level of authority that the board would have along with accountability for their performance. Frequently, Government has been seen to interfere in petty matters such as postings and transfers of staff of the enterprise, grant of licences/sanctioning of tenders etc. Government nominees on the boards of public sector enterprises attend meetings without adequate brief and frequently stall decisions in the board or get the matters referred to government for decision. Many public enterprises have suffered since timely decisions could not be taken in the board meetings.
Q13) Explain liberalization since 1991.
A13) Since 1991, when the liberalization movement started in India, areas reserved for the public sector have come down drastically. Prior to July 1991, 17 industries were reserved for the public sector. After July 1991, this list had been pruned to merely 8 and from December 2002, only three industries are reserved for the public sector. Hence, this measure has consequently opened up erstwhile reserved areas for competition and caused challenges to the public sector competence/performance.
Q14) Explain disinvestment of government equity after 1991 in public enterprises.
A14) After 1991, disinvestment of government equity in selected public sector enterprises has also brought in a certain amount of fiscal discipline in these enterprises. Listing in stock markets has also brought about changes in the way the public sector managements think. From the year 2000, offloading of major portion of equity to private entrepreneurs has brought in a totally new dimension to public sector management. All these changes have been reflected in the organization structure of these enterprises and their ability to face competition. Experience of industrially developed countries has shown that performance of an organization, whether in the public sector or private sector, has largely dependent on the leadership of the chief executive officer and he, in turn, cannot be successful unless he is backed by a very professional and competent board of directors. Since public enterprises have to deal with delicate questions of policy which affect the stability, self-reliance and integrity of the country, their boards of directors play a very crucial role. Unless the governing board has several members, who are not only competent but also wise, the organization is bound to suffer. The effectiveness of the management board of directors is crucial not only to the success of the public sector enterprise but also to the future of the country.
Q15) How do you manage public sector?
A15) Managing public sector efficiently in order to deliver these objectives could itself be a very onerous task. Hence, the organizational structure of the public enterprises had to be designed in a suitable manner, which could enable the public enterprise to perform under the overall guidance and patronage of the government, while at the same time be autonomous enough to carry out activities which would ensure that the economic goals set for it could be achieved successfully. As time went on, public sector enterprises increased in number and took on more and more responsibilities. Sick private industries were also taken over by Government and converted into public sector enterprises, obviously to safeguard employment. This increased the role of the public sector from managing infrastructure industries which had virtual monopoly to managing industries which were sick and in the competitive fields. Hence, the organizational structures for public sector enterprises underwent changes with changes in portfolios.
Q16) Explain the typography of sectoral aspects of SLPE’s 20.
A16) Of the total 747 State PSUs for which information is available, about 43 per cent belong to the manufacturing category while about 22 per cent are promotional enterprises. About 9 per cent belong to the trade and services category 7 per cent each to the financial and welfare categories. Utilities account for the balance 12 per cent of enterprises. It is evident that the manufacturing enterprises followed by the promotional enterprises dominated the scenario. This was because the various State Governments emulated the Central Government in giving a fillip to industrialisation. The trading and services enterprises received an encouragement to provide export thrust and create a suitable infrastructure of services at the State level. The promotional enterprises were set up to orient social activities with an economic tinge at the State level. The welfare enterprises were a new breed of the State PSUs set up to provide economic support to the backward classes of society, comprising scheduled castes, scheduled tribes, minorities, women and handicapped. The utility enterprises had their presence in each major State. These comprised the State Road Transport Corporations and the State Electricity Boards and, in some cases, unbundled State power utilities-generation companies/transmission companies/ distribution companies.
Q17) Explain the total investments of sectoral aspects of SLPE’s 20.
A17) The total investments in all the State PSUs taken as a whole grew from Rs.77729.79 crore in 1990-91 to Rs.197053.77crore in 1998-99. The financial sector enterprises saw an increase of investments from Rs.16864.43 crore to Rs.31293.77crore followed by Rs.8524.73crore to Rs.21219.45crore in manufacturing State PSUs during this period. The promotional enterprises saw their investments increasing from Rs.2991.71crore in 1990-91 to Rs.17941.92crore in 1998-99. In case of trading and services, welfare and utility State PSUs, investments in this period increased from Rs.816.27 crore to Rs.2367.38 crore, Rs.285.42 crore to Rs.1347.08 crore and Rs.48247.23 crore to Rs.122884.17crore respectively. Category-wise distribution of total investment in State PSUs in the years 1990-91 and 1998-99 is indicated in Fig.4.9. 4.27 It is clear that the promotional, welfare, trading & services and utility State PSUs registered a higher rate of growth as compared to the financial and manufacturing State PSUs. This trend reflected the increasing emphasis being placed on the welfare’ role of the State over time.
Q18) What is the net profit position of the State PSUs?
A18) The net profit position of the State PSUs assuring 1990-91 to 1998-99, excepting 1994-95 and 1995-96, these enterprises incurred losses during all the other years. However, it is interesting to note that some sectors such as financial, trading & services and welfare enterprises (excepting for 1990-91), earned profits all through. Promotional enterprises have shown mixed performance. The manufacturing and utility (excepting in 1994-95) categories of enterprises incurred losses consistently. The utility enterprises were major loss makers. This contradicts the general perception that all State PSUs are in losses. Further, it goes against the belief that welfare and promotional State PSUs are necessarily loss-making propositions. Category-wise distribution of net profits in State PSUs in the years 1990-91 and 1998-99.
Q19) What is the net worth of the enterprises?
A19) The net worth of the enterprises in all the categories taken together increased from Rs.14555.36 crore in 1990-91 to Rs.53564.56 crore in 1998-99. During this period, the total investment increased from Rs.77729.79 crore in 1990-91 to Rs.197053.77 crore in 1998-99. This signifies considerable erosion in the use of investment, from 5.34 times in 1990-91 to 3.68 times in 1998-99.
Q20) What is the total revenue earned by the State PSUs?
A20) It is the relationship between total investment and total revenue earned by the State PSUs under different categories. For the year 1998-99, the turnover was 0.16 times in the case of financial enterprises, 0.74 times for manufacturing State PSUs, 0.21 in the case of promotional enterprises, 5.24 for trading and services enterprises, 0.39 times in the case of welfare enterprises and 0.60 times for utility enterprises. Though strictly inter-category comparison is not possible, it could be said that enterprises in all the categories had a vast scope of improvement.
