Fall in raw material costs, staff costs turn PSUs into ‘superachievers’, beat private peers

Fall in raw material costs, staff costs turn PSUs into ‘superachievers’, beat private peers

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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