State Level Public Enterprises Perform Well in Pro-Reform States

The State Level Public Enterprises (SLPEs) have played a very important role in providing infrastructure services including, power supply, road transportation and irrigation in the different States and Union Territories.  The contribution of these enterprises to the society, their ability to generate revenue, maintain profitability have been brought out lucidly in the Second National Survey of State Level Public Enterprises (2007-08) conducted by the Ministry of Heavy Industries & Public Enterprises.

There are a total of 849 operating State Level Public Enterprises in India employing over 18 lakh people. The National Survey, based on information furnished online by 579 companies, reveals that despite many constrains these enterprises have made a significant contribution to the State exchequer.

Bulk of the investment in these enterprises has gone into infrastructure projects, which are mostly classified as public utilities. Out of the 579 enterprises, 357 SLPEs earned profits, while as many as 190 SLPEs incurred losses. “Although these enterprises are often monopolies, they operate at a price disadvantage as they have to work under an administered price regime. Despite rise in inputs costs, prices of goods and services of these enterprises have not been correspondingly raised for years” said Heavy Industries Minister Mr. Praful Patel, explaining the reasons for their losses.

Composition

As high as 67% of the investment in SLPEs has been in the power and energy sector, followed by investment in ‘Industry’ with a share of approximately 9%. Financial services claimed a share of 8%, comprising various promotional institutions catering to different sectors like handloom and handicrafts development, fisheries and forestry development etc. This was followed by investment in ‘transport services’ with a share of 5% of total (financial) investment. Sectors such as mining (4.5%), trading and marketing/other services (3.5%) and agriculture (2%) had comparatively much lower investments.

Investments

The total investment in the 579 SLPE’s stood at Rs 3,29,079 crores. This comprised Rs 1,15,588 crores as paid-up capital and Rs 1,83,256 crores as long term loan.  The debt-equity ratio accordingly worked out to 1.6:1.

State-wise, Maharashtra tops this list with a total investment of Rs. 63,129 crores followed by Gujarat, Karnataka, Andhra Pradesh and West Bengal.

Top 5 States in terms of Investment in SLPEs, 2007-08

Sardar Sarovar Narmada Nigam Ltd. with an investment of Rs. 27,158 crores is the biggest SLPE.

Top 5 SLPEs in terms of Investment, 2007-08

Turnover

The total turnover of the 579 SLPEs stood at Rs 2,39,453 crores. However, this figure does not give the true picture of the financial performance, as most public utilities, like power supply and road transport undertakings, are often required to operate under controlled/administered prices, much below the remunerative prices, which reduce the value of turnover.

In terms of gross sales/turnover, Gujarat topped the list with a turnover of  Rs 42,038 in 2007-08.  It was followed by Maharashtra (Rs. 35,725 crores), Andhra Pradesh, Tamil Nadu and Karnataka.

Top 5 States in terms of Turnover, 2007-08

Maharashtra State Electricity Distribution Company (Maha Vitaran) ranked first amongst all the 579 SLPEs with a turnover of Rs. 20,159 crores.

Top 5 SLPEs in terms of Turnover, 2007-08

Profitability

In terms of profit making SLPEs, Odisha led all the States with a net profit of Rs 2,232 crores. It was followed by Maharashtra (Rs 1,070 crores), Andhra Pradesh ( Rs 1,053 crore), Gujarat (Rs 1,031 crores) and Karnataka (Rs 831 crores)

The Orissa Mining Corporation was also the most profitable SLPE posting a net profit of Rs 1,052.86 crores.  Maha Genco (Rs 300.03 crores) and Maha Transco (Rs 258.20 crores) were the two companies from Maharashtra in the Top 10 profitable SLPEs list.

The survey also throws light on the most loss making SLPEs. Delhi Jal Board topped the list of loss making SLPEs with a loss of Rs. 1,567 crores. It was followed by Delhi Transport Corporation (Rs. 1,216 crores), Bihar State Electricity Board (Rs. 585 crores), Uttar Haryana Bijh Vitaran Nigam Ltd., (Rs. 495 crores ) and Maharashtra State Road Development Corporation (Rs. 422 croes).

Employment 

In terms of employment, Maharashtra topped the list, with a workforce of 2,44,625 employees in its 55 SLPEs.  It was followed by Andhra Pradesh (2,27,889 employees), Tamil Nadu (1,97,206 employees), Gujarat (1,06,503 employees) and Uttar Pradesh (97,225)

Top 5 SLPEs in terms of Manpower, 2007-08

One of the significant findings of the survey is that  SLPEs, though burdened with several constraints contributed more to the exchequer by way of local taxes, value added tax and dividend pay-out, as compared to the subsidies they received from the respective state governments.

It is clear from the survey that the industrially developed states of Western India and Southern India also have robust state level PSEs. An evaluation of the revenue and profitability of the enterprises also shows that wherever reforms have been implemented, the SLPEs have shown better results. In case of power utilities, for instance, collection of revenues has gone up significantly in states that have adopted franchising model.

To maintain the economic growth momentum, it is important to ensure that there are no supply side constraints. Towards this end, the state level public enterprises, especially those in infrastructure sector have a very important role to play.  It is for the respective state governments to prepare conducive business environment for them to flourish.

The National Survey can be accessed on the website: http://dpeslpe.gov.in.

 (PIB Features.)