PSUs’ losses escalating

Vijay C Roy

Tribune News Service

Chandigarh, March 23

Public Sector Undertakings (PSUs) in Punjab continue to bleed with accumulated losses touching Rs 9,342 crore in 2016-17 as compared to Rs 6,474 crore in 2015-16, states a report of the Comptroller and Auditor General (CAG).

The rise in the accumulated losses during the year was due to heavy losses incurred by the Punjab State Power Corporation Ltd (Rs 1694.85 crore) and Punjab State Civil Supplies Corporation Ltd (Rs 996 crore).

The accumulated loss was Rs 6,236.66 crore in 2014-15 and Rs 5,870 crore in 2013-14.

Around a dozen of the PSUs are running in losses for a very long time and the state government had to intervene with financial support to ensure regular salaries and other recurring expenses.

The state government provides financial support to PSUs in the form of equity, loans, grants and subsidies. The state government investment (capital and long-term loans) in 30 PSUs was Rs 30,857 crore as of September 2017.

The losses have hit the state government earnings. The percentage of Return on Equity (RoE) of working PSUs showed a fluctuating trend. In 2015-16, it was -33.50 per cent. It was not measurable during 2016-17 as equity was negative. During the same period, the return on investment (RoI) of working PSUs declined to 0.42 per cent in 2016-17 from 7.35 per cent in 2015-16.

The RoE ratio essentially measures the rate of return that the owners of common stock of a company receive on their shareholdings. While the ROI measures the amount of return on an investment relative to the investment’s cost. A high ROI means the investment’s gains compare favourably to its cost.

The total turnover of these 30 PSUs were Rs 57,796 crore while the debt was 52,899 crore. As a result, the ratio of debt to turnover increased from 28 per cent in 2014-15 to 45 per cent in 2015-16 and further increased to 92 per cent in 2016-17 due to loans given by the state government to Punjab State Power Corporation Ltd under UDAY Scheme and discharging of cash credit liability of State Procurement Agencies by the government and its conversion into long terms.

In 2016-17, the major contributors to the profit were Punjab Small Industries Export Corporation Ltd (Rs 29.36 crore), Punjab State Container and Warehousing Corporation Ltd (Rs 14.67 crore) and the Punjab Genco Ltd (Rs 9.53 crore). Of the total, 12 PSUs reflected a profit of Rs 66.32 crore.