NEW DELHI, Dec 30: Whether it was for filling coffers or giving a much-needed push to the economic growth, the government turned to cash-rich PSUs during 2012 which will go down as one of the most challenging year for corporate India.
Battling the impact of sluggish economic growth on the tax revenues, the Finance Ministry resorted to disinvestment of government equity in the better-performing public sector units (PSUs) to meet its fiscal targets.
Besides, at a time when there was a dearth of investment in the industrial world, the principal shareholder gave a call to the PSUs to spend their cash pile so that the economy gets a leg-up.
“Use it or lose it,” was the stern message given by Finance Minister P Chidambaram to the PSUs which had cash reserves of Rs 2.50 lakh crore that can be pumped in the bankable projects which, however, were hard to come by.
Moreover, it is through selling stakes in these companies that the Finance Ministry was targeting to bridge the fiscal deficit.
The government’s non-starter Rs 30,000-crore disinvestment programme got a little boost towards the close of the year.
After several aborted attempts, the government offloaded the shares of Hindustan Copper in November—the first disinvestment of the current financial year of 2012-13. It fetched the government Rs 808 crore, with bulk of the equity being purchased by the state-run banks and LIC.
However, the big one was NMDC stake sale in December, yielding Rs 6,000 crore.
Although there was a long lull before NMDC issue, the year 2012 began with the offloading the shares of oil major ONGC and initial public offer (IPO) of NBCC in April.
The pipeline for disinvestment is quite long and includes over 10 blue-chip companies such as NTPC, BHEL, Sail, MMTC and Oil India.
The PSUs weathered the slowdown rather well even as those in the oil sector grappled with the politically-sensitive issues like taking higher subsidy burden on themselves.
To reduce its oil subsidy bill, the government had increased the price of diesel and limited the supply of subsidised cooking gas.
Despite global issues, the “public sector in India has been able to perform better in this calendar year compared to the last year. On the back of good performance, the government has asked CPSEs to invest their surplus funds in new projects including power and coal,” Director General of the Standing Conference of Public Enterprises (SCOPE) U D Choubey said.
The market capitalisation of PSUs increased by 13.2 per
cent in 2012. As per the BSE PSU Index, m-cap of public sector units stood at Rs 16.02 lakh crore on December 26, 2012 compared to Rs 14.14 lakh crore on January, 2 this year.
Overall, the year proved to be good for a majority of CPSEs, particularly blue-chip companies like Coal India, recording a high growth in this calendar year.
Top earning PSUs like Coal India recorded a healthy growth of 18.7 per cent jump in net profit at Rs 3,078.08 crore in the second quarter of this fiscal and reported a 7.8 per cent rise in profit after tax at Rs 4,469 crore in the first quarter, supported by higher sales and e-auction realisation.
Realising that China has been aggressive in acquiring strategic assets like iron ore and coal in Africa and other parts of the world, the government also wanted its PSUs to go and scout for these minerals abroad.
While the government formed some key policy groups, initiative has proved to be a non-starter.
The policy vested more powers with CPSUs, which have a three-year record of profit, mainly with Maharatna and Navratna companies for such buy-outs.
However, only few PSUs, including CIL and NMDC, that had acquired assets abroad could take advantage of the policy.
While for the remaining companies like ICVL and MOIL, the plan really could not take off as they have been scouting for critical assets abroad for the last over two years but have not been able to seal any deal.
The year also witnessed a controversy over the tussle between the country’s near-monopoly coal miner Coal India (CIL) and power companies over fuel supply, following which the intervention was made by the Prime Minister’s Office. (PTI)
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