Public sector undertakings (PSUs) in India have weathered the economic slowdown better than their private sector counterparts, a study by business information provider Dun & Bradstreet (D&B) India has revealed.
A comparative study?carried out among 30 listed non-financial central public sector undertakings (CPSUs) and 191 listed private firms, each with an income above Rs 1,465 crore in 2008-09 disclosed that total sales by CPSUs grew 19.2% against 12.8% in the previous year. In comparison, private firms recorded a decline in sales from 22.1% in FY?08 to 19.1%.
CPSUs which recorded more than 100% growth in sales in FY?09 were Engineers India Ltd and Fertilisers & Chemicals Travancore Ltd, belonging to the capital goods and fertiliser sectors, respectively.
?This signifies that the PSUs dealt with the slowdown in the economy much better than the private companies,? D&B India chief operating officer Kaushal Sampat said. However, the performance of private entities was much better in the five years up to March 31, 2009 taken together, with a compounded annual growth rate (CAGR) of 23.65% against 19.26% CAGR of CPSUs.
Net profit figures also indicate a healthier performance of public sector vis-?-vis private firms. Although, both categories of firms clocked a fall in net profit, companies in the public sector experienced a lower decline of 10.83% against a reduction of 15.48% in the case of private sector. In fact, the net profit of CPSUs, excluding oil and gas companies, increased 0.33% during 2008-09.
With a better show in terms of net profit, PSUs also distributed higher dividend. They retained 63% of profits and distributed 37% as dividends, but private companies retained 77% profits and handed out the balance to shareholders. During the last financial year, most Bombay Stock Exchange indices gave negative returns, but the BSE PSU index registered the lowest negative return.
At -29.58%, the return of PSU index was much better than -37.94% of BSE Sensex, -42.77% of BSE 500 index and -54.01% of BSE mid-cap index. During 2007-08 too, PSU index generated 25.41% returns, higher than 19.68% by BSE Sensex and 24.25% by BSE 500 index.