The first-quarter performance of public sector undertakings (excluding banks and NBFCs) reflects continuing pressure on their bottom lines. Though many PSUs have reported improved profitability through significantly lower expenditure and higher other income, the poor performance of oil PSUs has neutralised their good work in the aggregate numbers.
Thirty-seven PSUs for which results were available showed an 18.1% rise in their aggregate sales to Rs 2.34 lakh crore during April-June ?10 from Rs 1.98 lakh crore during April-June ?09. But their operating profit shrank by 42.7% year-on-year to Rs 20,539 crore from the level of Rs 35,848 crore. Other income, too, decreased by 31.2% to Rs 3,765 crore from Rs 5,471 crore during the comparative periods, giving the PSUs little leeway on the net profit front.
The steep decline in their profitability translated into a 932 basis points dip the operating profit-to-sales ratio, from 18.10% during April-June 2009 to 8.78% during April-June 2010.
Total expenses rose disproportionately higher to total sales, indicating a failure in controlling costs by the sample PSUs. Their total expenditure increased by 28.5% to Rs 2.18 lakh crore during April-June 2010 from the level of Rs 1.70 lakh crore a year earlier.
But a point to note here is that these numbers were largely skewed by the inconsistent performance of oil-PSUs, owing to under-recoveries and their partial offset by the government.
Without oil PSUs, the total operating profit of 32 PSUs showed only a marginal decline of 1.8% to Rs 24,613 crore during the quarter. Their sales rose 8.3% to Rs 84,667 crore during April-June ?10. Their operating profit-to-sales ratio decreased to 29.07% from 32.04%.
The list of 37 PSUs includes heavyweights like Indian Oil, ONGC, NTPC, SAIL, GAIL and MMTC. Individual analysis indicates that PSUs like Bhel, GAIL, NMDC, TN Newsprint, Neyveli Lignite, Maharashtra Electrosmelt and GMDC did exceptionally well in the first quarter.
The operating profit of Bhel increased 37.8% to Rs 1128 crore during April-June ?10. It has maintained its track record of earning profits uninterruptedly for nearly four decades without a break. With the highest order book position of over Rs 1,48,000 crore at the end of the first quarter, the company expects to achieve robust growth in 2010-11 and beyond.
Similarly GAIL reported a 31.2% jump in its operating profit. Its sales also rose by 17.5% in the quarter. Its better performance was due to the higher volume of natural gas transmission and higher production of LNG.
Among the sample, a significant jump in sales was seen with KIOCL, Madras Fertilisers, TN Newsprint and Engineers India.
On the profit front, net profit of the 37 PSUs fell 70% to Rs 5,583 crore in April-June 2010 from Rs 18,637 crore in April-June 2009. The net profit-to-sales ratio dipped 702 basis points to 2.39% during the quarter from 9.41% a year earlier. This has happened probably due to a sharp fall in the profit after tax of companies like ONGC, Oil India, MRPL and STC.
