CPSEs: The Real Wealth Creators


Financial performance wise CPSEs have consistently proved themselves as the real “Kohinoors” of corporate world. Today there are 331 CPSEs out of which 257 are in operation and rest is under construction.

When we see the performance of CPSEs  during FY17, total turnover of all CPSEs stood at INR 19,54,616 crore compared to INR 18,34,635 crore in the previous year showing a spurt of 6.54%, while profitability of profit making CPSEs also increased by 5.28% standing at INR 1,52,647 crore only during 2016-17 compared to INR  1,44,998 crore in FY16. On the other hand the Aggregate Loss of loss making CPSEs decreased from INR 30,759 crore to INR 25,045 crore during the same period. Thereby Aggregate Net profit reported by all 257 CPSEs was INR 1,27,602 crore as against INR 1,14,239 crore reported in the year 2015-16, thus showing a growth in overall profit by 11.70% as against a growth rate of 11.06% in FY16. Interestingly number of profit making CPSEs have also increased to 174 in FY17 from 164 CPSEs in previous year, whereas number of loss making CPSEs have increased from 79 to 82 during the same period. Food Corporation of India neither earned profit not incurred loss.  Another corollary to wealth creation by CPSEs is that there were only five CPSEs with a total investment of INR 29 crore at the time of the First Five Year Plan but now there are 331 CPSEs with a total investment of a whooping INR 12,50,373 crore.

Despite fabulous performance put forward by CPSEs on sustainable basis over the years financial performance of CPSEs was not fully celebrated at the bourses, again thanks to the perception (or misconception) about their ability to derive profitability as their private players. During FY17 market capitalization of CPSEs at BSE increased from 13.66% as on 31 March 2016 to 14.61% as on 31 March 2017. Interestingly 50 CPSEs traded on stock exchanges of India as on 31.03.2017. Based on stock prices on Bombay Stock Exchange (BSE), as on 31.03.2017, the market capitalization of 50 CPSEs stood at Rs. 17.76 lakh crore as against Rs. 12.94 lakh crore stood as on 31.03.2016. Thus, there was increase in market capitalization of CPSEs by mammoth 37.24% (Rs.4.82 lakh crore) as on 31.03.2017 over market capitalization as on 31.03.2016. Important to note that after Modi government has taken charge of the country, the whole economic environment has changed and as bourses noticed a sudden spurt, CPSEs have showed their real mettle and many of the top performing PSUs became the darling of both institutional and as well as retail investors.

This article is part of GDP Magazine’s 3rd Annual PSU Handbook 2018

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