| ONGC Chairman Subir Raha can't help but chuckle when he recounts this story. Raha and some other PSU chiefs were at a university and were being introduced to the course director. When one of the participants, the head of a state PSU, was asked how his company was doing, he said, "We don't quite know because we haven't put out results for over 10 years." That confession says more about the state of PSUs than many theses would. The India Today-Crisil survey, the first of its kind, examines the performance of PSUs between 1998 and 2003. The survey aimed at contributing to the ongoing debate on the government's role in running businesses. It ranks the enterprises across size and business segment categories using variables like financial performance, contribution to national exchequer, employment and strategic importance (see methodology). The task was tougher than it might appear. To start with, not all PSUs have data available. Although we are nearing the end of 2004-5, the earliest data available was for 2002-3. Secondly, despite repeated efforts the India Today-Crisil survey of PSUs had to settle for a sample size of 186 of the 227 existing units because data was not available.  | OIL AND NATURAL GAS CORPORATION LTD
Listed public sector enterprise | | SALES
33,611.01
| PROFIT
8,664.43 | NET WORTH
40,002.41 | | | Slick Operation | | PICTURE SPEAK | |  | | SUBIR RAHA, CMD, ONGC: "We will be a $50 billion company within five years." | | It would be easy to attribute the performance of the Oil and Natural Gas Corporation (ONGC) to burgeoning oil prices. But that would be simplistic. In fact, ONGC Chairman and Managing Director Subir Raha almost expects the question and explains with an affable ease. Just over 55 per cent of ONGC's production is oil and 45 per cent is gas. So oil gets the benefit of the windfall but gas prices are still controlled and ONGC gets barely 20 per cent of the international prices (just over $1 compared to the global price of $5 per thousand MMBTU). Oil is subsidising the gas costs and ONGC is subsidising oil companies, including HPCL and BPCL. More importantly, it also subsidises the private and foreign partners operating the oil and gasfields. So ONGC owns 30 per cent of the equity of oil fields it operates with private players since 1995-96 but pays 100 per cent of the royalty, which is around Rs 1,000 crore a year. When production goes up, ONGC's liability also goes up in terms of payments. ONGC also pays oil and GAIL for operating losses in the Northeast but bears the brunt of its own operations on its balance sheet. There are more technical issues which, Raha says, would translate into rupees. Apparently, if ONGC were to monetise all these policy handicaps it could tote up an additional Rs 7,500 crore in income. Raha uses another parameter: market cap and market valuation. "Oil prices rose recently but ONGC shares have been rising for the past four years-from Rs 132 in May 2001 to Rs 800 plus now. That reflects the investors' view on the company and its core strengths." ONGC plans to invest close to Rs 10,000 crore in new explorations and expansion in a year. It has also prepaid a Rs 4,000 crore World Bank-ADB loan and is now debt free. Around the bend is an ambitious growth plan. The company plans to double its production and raise the recovery rate of 27 per cent to 40 per cent by 2020. Sum total: its turnover, which rose from Rs 24,867.24 crore in 2001-2 to Rs 36,684.49 crore in 2002-3, would touch Rs 2,20,000 crore in the next five years. -By Shankkar Aiyar | | Be that as it may, let's look at the overall picture. India has genuine reasons to be proud of its entrepreneurial class. However, it is not the Ambanis, the Tatas or the MNCs but the government of India which is the largest industrial house in the country today. Of the total market cap of Rs 17,82,386 crore, listed PSUs account for Rs 4,62,000 crore, or roughly a fourth of the total market cap. Indeed, the government as an industrial baron is nearly five times larger than the biggest private-sector business group. On the basis of the 186 enterprises studied, its operating income is Rs 4,50,545 crore and net profits add up to Rs 29,201 crore. But its profitability ratio is an abysmal 6 per cent. | NUCLEAR POWER CORPORATION OF INDIA LTD
Big-size PSU with turnover of over Rs 1,000 crore | | SALES
4,839.88
| PROFIT
1,509.25 | NET WORTH
13,7470.14 | | | | PICTURE SPEAK | |  | | S.K. JAIN, CMD, NPCIL: "We are increasing capacity in existing plants rather than opening new ones." | | Fuelling Forward The Nuclear Power Corporation of India (NPCIL), with its 14 plants, believes nuclear fuel can power India's economy. So despite technology denial regimes, it has spearheaded India's efforts in perfecting the technology to generate nuclear power. This year, it recorded a profit of Rs 2,604 crore, having secured its receivables with a Rs 1,600 crore infusion. Its "cash-and-carry" schemes allow its stations to direct power outputs to states which do not default on payment. The average capacity utilisation of NPCIL plants has risen from 60 per cent a decade ago to nearly 85 per cent. "We are focusing on multiplying capacity at existing plants rather than opening additional plants,'' says CMD S.K. Jain. So from 3 per cent of the total power generation in India, the nuclear power will comprise 5 per cent by 2007, and by 2012, the generation will double to 5,600 MW when the eight new plants under construction plug into the national power grid. -By Sandeep Unnithan | | Clearly, the government is an industrial house in disarray. Of the 186 PSUs surveyed, nearly 40 per cent (73 out of 186) have a negative net worth. In terms of operations, 89 (or 47 per cent) show losses and 113, or 60 per cent of the companies have not paid a dividend in the year 2002-3. The devil really is in the details though. The erosion of net worth in the 73 enterprises is an astounding Rs 48,199 crore, or four times what the government budgets for primary education in a year, and the total losses of the 89 enterprises is Rs 9,881 crore, which is more than what has been budgeted for healthcare. Just the accumulated losses of the worst five PSUs totes up to Rs 30,966 crore or six times what has been allocated for drinking water supply. | NATIONAL FERTILISERS LTD
Fertilisers and chemicals company | | SALES
3,683.35
| PROFIT
286.27 | NET WORTH
990.08 | | | | PICTURE SPEAK | |  | P.S. GREWAL, CHAIRMAN, NFL
"Our plan to reduce energy consumption has paid off well." | | Catalyst for Growth P.S. Grewal oozes a rare confidence. He has reason to. As chairman of the National Fertilisers Limited (NFL), he has not only helped the company achieve an operating profit of Rs 175 crore in 2004-5, but has also turned it into a zero-debt organisation. Last year, the company recorded a net profit of Rs 85 crore, has not registered any shutdowns as in the past, has already achieved 100 per cent production target and is likely to cross it in the coming financial year. "Our plan to reduce energy consumption has paid off well. Saving energy in such a big company is equal to production," says Grewal, who took over as chairman in 2001. Hard work and team effort, says Grewal, are responsible for the company's performance. The NFL has five units, two in Nangal and one each in Bathinda, Panipat and Vijay Nagar with a total installed capacity of 14.88 lakh tonnes of nitrogenous fertiliser per annum. -By Subhash Mishra | | The conventional wisdom is that public-sector enterprises create and sustain employment. The truth is that Central PSUs account for only six million of the 27 million jobs in the organised sector and a fraction of the total workforce of over 400 million people. Also it comes at a huge cost. The Economic Survey of 2004 lists that the average annual emoluments of a public-sector employee are Rs 2.24 lakh. Worse, on an equity of Rs 2,46,106 crore, the government earned a dividend of Rs 12,907 crore in 2002-3, or roughly 5.2 per cent. Simply put, the government is earning less per year on its investment than it pays for its borrowings. | CEMENT CORPORATION OF INDIA LTD
Consumer goods company | | SALES
129.00
| PROFIT
-215.36 | NET WORTH
-1,478.22 | | | | PICTURE SPEAK | |  | KISHU TEKCHANDANI, CMD, CCIL
"Despite all odds, CCI has managed to stand on its feet." | | Turnaround Story When Kishu Tekchandani took over as CMD of Cement Corporation of India Ltd (CCIL) four years ago, the company had losses worth Rs 20 crore and over Rs 58 crore operating losses from the non-operating plants. Today, even though its net worth may have eroded, CCIL promises a profit of Rs 14.48 crore for 2004-5 and for the first time after 1998 the non-plan support from government has not been sought for salaries and statutory dues. "We have had pacts for marketing and have raised the production day by day," says Tekchandani. So three plants are fully operational and plans have been submitted to modernise three operational plants, restart two plants with joint ventures and sell five non-operating ones. A month before retiring, the CMD can rest assured that these plans will push the CCIL in the right direction. -By Shyamlal Yadav | | And, of course, if you knock off the Rs 9,059 crore of dividend that the petroleum companies have delivered or better still take away the Rs 11,836 crore of dividend paid by all the companies in the energy sector, the return would be tragically laughable. Market perceptions echo the fiscal tremors. More than two-thirds (or Rs 3,25,000 crore) of the Rs 4,60,000-odd crore market cap for public enterprises comes from energy companies, leaving little doubt about what investors and the market think of the others. Indeed, this high market cap too is a reflection of the high petro prices and the near monopolistic conditions in which these energy giants operate. Sure the picture has improved (anecdotally since the data for 2003-4 and 2004-5 is not yet in public domain) and some companies like sail riding the commodities prices boom have delivered strong results. But that doesn't improve the picture. Last year, 24 loss-making PSUs were allocated Rs 517 crore in a package so that they would pay the statutory dues of their employees. It is quite a statement that a government which awards private-sector companies for corporate governance should delay payments. If you thought that was a one time package think again. This year the budget has allocated Rs 14,040 crore (including railways) as equity support in addition to loans worth Rs 3,554 crore. | ANTRIX CORPORATION LTD
Small PSU with turnover of Rs 100-500 crore | | SALES
108.55
| PROFIT
18.57 | NET WORTH
59.55 | | | | PICTURE SPEAK | |  | K.R. SRIDHARA MURTHI, EXECUTIVE DIRECTOR, ACL
"We are like a private firm in a government building." | | Tapping the Skies Antariksh, in Sanskrit, means space. Creating its own space in the Indian Space Research Organisation (ISRO) is Antrix, which has zoomed from less than Rs 2 crore in 1993-94 to Rs 302 crore in 2003-4 and is expected to add another Rs 100 crore this year. "It's a one-stop shop lobbed high by aggressive marketing," says K.R. Sridhara Murthi, Antrix executive director and an IIM-Ahmedabad alumnus. From launching satellites to selling images taken from space and helping telecom bigwigs stay online, Antrix is the answer to all business linked with TV channels, direct-to-home broadcast, atms and remote and rural connectivity. Antrix's boom time came in 1994-95 when the Indian remote sensing satellites IRS-1C and 1D opened the doors to the world for earth images. This year, Cartosat-providing the world's first 3-D space images-and the new generation insat-4A is likely to be launched. Antrix also earns from tracking satellites for other operators but the real money is in putting two-tonne satellites into orbit, which means getting into the tough $3 billion market. A daunting prospect, but then no frontier is final for Antrix. -By Stephen David | | Index
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