Helped primarily by a steep fall in raw material costs but also with a more rigorous reining in of employee costs, India’s central public sector enterprises (CPSEs) posted a decent 12.5% growth in aggregate net profit in 2015-16, even as their gross turnover declined 7%, according to the latest survey tabled in Parliament on Tuesday. The CPSEs’ net profit had contracted a steep 20% in 2014-15, even on a moderate 3.4% contraction in sales.
On the face of it, these public-sector companies appear to have done better than their listed private-sector counterparts as per Reserve Bank of India data, 2,932 listed non-financial/non-government companies had reported only a 9.3% increase in their aggregate net profit in 2015-16, the year in which they witnessed a first-in-15-years contraction (1.6%) in sales. However, rather than efficiency gains by the CPSEs, this has more to do with the fact that major state-owned firms that drive the overall CPSE performance benefit much more from the plunge in global commodity prices than front-line private corporates, which have more diversified cost structures. Read More…
Credit By : financialexpress.com
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