Post-pandemic recovery: 22 CPSEs back in black in FY22, shows data

Twenty-two loss-making central public sector enterprises (CPSEs) turned around in FY22 as post-pandemic recovery led to higher demand in many sectors, data from the Public Enterprises Survey 2021-22 shows.

Of the 22 CPSEs, nine reported losses for the past two consecutive years. The majority of CPSEs turning profitable were from power (4) and petroleum (3), civil aviation (3), railways (2), tourism (2), and steel (2) sectors.

Higher demand after the pandemic and a fall in expenditure helped these CPSEs increase their turnover and revenue.

Top CPSEs that turned profitable in FY22 include Mangalore Refinery & Petrochemicals, Rashtriya Ispat Nigam (RINL), and Bharat Heavy Electricals Ltd (BHEL). BHEL, in its FY22 annual report, said shift in focus from revenue to project-centric business diversification and prudent financial management resulted in the turnaround.

On January 27, 2021, the Cabinet Committee on Economic Affairs had approved 100 per cent divestment of the government shareholding in RINL, also known as Visakhapatnam Steel Plant (VSP) or Vizag Steel. However, hearing a case against the privatisation bid, the Andhra Pradesh High Court in October last year observed that the Centre may have to reconsider its decision since the steel plant is making profits.

According to the Survey, the total gross revenue of the operating 248 CPSEs during FY22 grew 32.65 per cent to Rs 31.95 trillion. This increase was largely due to a rise in the petroleum (refinery & marketing), crude oil & transport, and logistics sectors. Operating CPSEs do not cover those units that are either under construction or under liquidation or closure.

Top five CPSEs having highest revenue during FY22 are Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Food Corporation of India, and NTPC.

Of the 248 operational CPSEs, 188 recorded a net profit and 59 posted net loss. The Food Corporation of India reported no profit or loss.

The aggregate net profit of profit-making CPSEs rose by 39.85 per cent to Rs 2.6 trillion in FY22. Among the profit-making CPSEs, the top five CPSEs accounted for 41.11 per cent of aggregate net profit comprising ONGC, Indian Oil Corp, SAIL, and NTPC.

The aggregate loss of loss-making CPSEs declined by 37.82 per cent to Rs 14,586 crore in FY22.

Making a case for privatisation of more CPSEs, the FY20 Economic Survey mentioned that privatised CPSEs have performed better than their peers in terms of net worth, profit, return on equity, return on assets (RoA), and sales, among others. “The RoA and net profit margin turned around from negative to positive surpassing that of the peer firms, which indicates that privatised CPSEs have been able to generate more wealth from the same resources,” the survey said.