India?s public sector undertakings turned in improved results for the second quarter, primarily aided by oil PSUs, which have started to benefit from the petrol price decontrol and hikes in the prices of LPG and kerosene. Seven non-oil PSUs managed to improve their bottom line substantially because of lower expenditure and higher other income.
Fifty-four PSUs (central & state) for which second quarterly results were available posted a 24.7% rise in their aggregate sales to Rs 2.74 lakh crore during the month from July-Sept ?10. This sharp increase came in the backdrop of 21.8% decrease in their aggregate sales to Rs 2.19 lakh crore during July-Sept?09 from Rs 2.81 lakh crore a year earlier.
NBFCs and banks are excluded from the study.
The operating profit of these PSUs increased 50.2% to Rs 46,834 crore during July-Sept ?10 but is less impressive compared with the 61% rise in July-Sept ?09 to Rs 31,174 crore from the level of Rs 19,365 crore a year earlier.
However, other income grew 33.6% during the July-Sept ?10 quarter.
The operating profit to sales ratio increased 289 basis points to 17.07% during July-September ?10, after a 729-basis-points rise to 14.18% in July-Sept ?09 from 6.89% during July-Sept ?08.
Total expenses rose lower when compared with total sales, indicating some improvement in controlling costs by PSUs. The total expenditure of the sample PSUs increased by 20.9% to Rs 2.34 lakh crore during July-Sept?10 from the level of Rs 1.94 lakh crore during July-Sept ?09.
Excluding oil PSUs, the total operating profit of 49 PSUs increased 14.8% to Rs 32,552 crore during July-Sept ?10. This is significant considering that a year before, in the same quarter, operating profit declined by 1.9% to Rs 28,341 crore from Rs 28,883 crore.
Sales growth of these PSUs turned out to be a positive 23.5% during July-Sept?10 from a negative of 5.2% during July-Sept ?09. The operating profit to sales ratio declined to 28.54% during July-Sept ?10 compared with 30.69% and 29.65% in the previous two years for the July-Sept quarter.
The list of 54 PSUs includes heavyweights like Indian Oil, ONGC, BPCL, HPCL, SCI, NTPC, SAIL, GAIL and MMTC. Individual analysis indicates that PSUs like Bhel, Hindustan Copper, IOC, BPCL, HPCL, SCI, GAIL, NMDC, TN Newsprint, Neyveli Lignite and GMDC did exceptionally well in the second quarter.
The operating profit of Bhel increased by 25.7% to Rs 1,794 crore during July-Sept ?10. It has maintained its track record of earning profits uninterruptedly for nearly four decades without a break. With the highest-ever order book position of over Rs 1,54,000 crore at the end of the second quarter, the company expects to achieve robust growth in 2010-11 and beyond.
Similarly Hindustan Copper reported a 219.1% jump in its operating profit in the second quarter of the current financial year. The sales also increased by 30.7% during the quarter. Its better performance is attributed to higher prices and sales volumes.
Among the PSUs studied, a significant increase in sales during July-Sept ?10 was seen in the case of Hindustan Organic Chemicals, Indraprastha Gas, NMDC and MMTC.
Of the sample PSUs, 23 showed a significant increase in the operating profit to sales ratio during July-Sept ?10. Some of these public sector undertakings were SCI, Nalco, Hindustan Copper and IOC.