IBP, Tide Water Lift RoNW Of PSU Firms During 2001-2002

Updated: Sep 26 2002, 05:30am hrs
The return on networth (RoNW) of 28 major public sector companies increased in 2001-02 over the previous year, indicating an improvement in the efficiency in generating higher shareholder value. The RoNW is measured as net profits as percentage of net worth. Of the 28 major public sector companies selected for this study, nearly 50 per cent were found to have increased their efficiency of generating higher shareholder value. Only profit-making public sector companies during 2001-02 and 2000-01 are considered for this study.

Some public sector companies latest year reserve figures are not available, so we have to considered the previous years figures. This study traces the trend of RoNW for 28 public sector companies in 2001-02 and 2000-01.

Aggregate networth of 28 companies has decreased by 0.9 per cent to Rs 95,746 crore during 2001-02 from the level of Rs 96,599 crore during 2000-01 but their combined net profits have increased by 4.3 per cent, resulting in a sharp increase in RoNW, higher from 16.73 per cent in 2000-01 to 17.61 per cent in 2001-02.

Of the selected 28 public sector companies, the top five according to the net profit to networth ratio during 2001-02 are IBP (43.90 per cent), Bharat Electronics (29.12 per cent), Container Corporation (27.48 per cent), Dredging Corporation (25.46 per cent) and Gas Authority (22.23 per cent). Among the 28 public sector companies, 14 companies have witnessed a fall in PAT to networth ratio, while 14 companies have shown a higher ratio in 2001-02 compared with 2000-01.

A significant fall was observed in the case of Balmer Lawrie (8.21 per cent in 2000-01 to 5.23 per cent in 2001-02), Chennai Petro (9.81 per cent to 6.06 per cent), Engineers India (17.37 per cent to 11.61 per cent), Hindustan Zinc (14.58 per cent to 6.37 per cent), ITI (9.71 per cent to 6.42 per cent), National Aluminium (18.36 per cent to 11.41 per cent), SCI (17.33 per cent to 11.32 per cent) and Rashtriya Chemicals & Fert (4.75 per cent to 1.96 per cent). Chennai Petrosratio was lower due to poor profit performance.

According to the Directors report, Chennai Petros profit was lower partly due to water scarcity, lower demand for Lube Base Stocks, lower refining margins and provision for deferred tax.