Govt loses Rs 66k cr in PSU stock slide

Written by Pradip Kumar Dey | Mumbai | Updated: Mar 5 2009, 05:51am hrs
Promoters of public sector companies, in other words, the Government of India, lost Rs 65.98 thousand crore, or 9.81% of their wealth, during the first two months of 2009.

This has probably happened due to poor profit performance of public sector undertakings (PSUs) in Q3 and the global financial crisis.

Market sentiments for companies across the board, including PSUs, have been down since the beginning of the year. This has made the Government of India poorer by nearly Rs 65.98 thousand crore; the government owns 50 listed PSUs.

DR Dogra, deputy managing director, CARE, said, The continuous fall in Indias benchmark index over the past many days has led to a new low in closing levels in the past 40 months.

He added that the fall was due to negative cues from developed economies and a slowdown in GDP and IIP growth in India. The fall has not spared PSUs, he noted.

As per current market prices (as on March 3, 2009) of PSUs, government holding is worth about Rs 6.06 lakh crore. However, at the start of the current calendar year (January 1, 2009), the holdings were worth Rs 6.72 lakh crore.

Wealth loss was highest in the case of trading gaint MMTC; government stake in the company is now worth Rs 33 thousand crore less than it was at the beginning of the year.

MMTCs share is currently worth Rs 13,463.79, down from Rs 20,092.15 on January 1. Another company in the mining and mineral sector, NMDC, has also led to major wealth erosion (Rs 18,000 crore).

The environment for PSU stocks has been extremely unfavourable, with most of them recording substantially negative returns than the market as a whole.

While the BSE Sensex has decreased by 14.9% since January 1, 2009, the BSE PSU index has slipped 12.2%. The Sensex closed at 8,427.29 points on March 3, 2009, down from 9,903.46 on January 1, 2009. The BSE PSU index, on the other hand, slipped from 5,450.24 to 4,786.11.

In some cases, though share price decrease has been spectacular, it has not translated into large wealth erosion for the government. This is owing to the inherently small size of such companies.