Parliamentary Committee expresses concern over huge losses in some CPSUs

New Delhi, Dec 20 (ANI): A Parliamentary Committee has expressed concern over the huge losses suffered by some Central Public Sector Undertakings (CPSUs) and the low rate of return on assets and pressed the urgent need for optimum utilisation of their assets to generate better earnings.
The Committee on Public Undertakings (COPU) also made some other recommendations, including technology upgradation and empowerment of the CPSU Boards to take all strategic decisions.
In a report tabled in the Lok Sabha on Thursday, the Committee said it undertook a comprehensive examination of 12 loss-making CPSUs and analysed the reasons for their losses year after year.
"The overall scenario of the performance of Central Public Sector Undertakings is rather insipid now," observed the Committee headed by BJP MP Shanta Kumar.
"From the analysis of the profit and loss figures of CPSUs given in the Department of Public Enterprises (DPE) survey (2016-17), the Committee observed that while CPSUs in few sectors like mining, power, steel, and petroleum and natural gas continue to hold a dominant market position, most of the CPSUs in other sectors have been continuously making losses over the years," the report said.
It said the Committee, during examination of the subject, found that as per the Public Enterprises Survey conducted annually by the DPE, the total financial investments in all CPSUs stood at Rs 12,50,373 crore as on March 31, 2017, compared to Rs 11,61,019 crore as on March 31, 2016, thus recording a growth of 7.70 per cent.
As far as the total investment in 77 loss-making CPSUs is concerned, the data furnished by the DPE as on 2014-15 was to the tune of Rs 1,36,673.05 crore and accumulated losses was Rs 1,18,556.89 crore, the report said.
Regarding performance, the DEP survey showed that the total income of all CPSUs during 2016-17 was Rs 18,21,809 crore compared to Rs 17,64,232 crore in 2015-16, showing a growth of just 3.26 per cent, the Committee said.
The loss of 82 loss-making CPSUs, although showed a decrease in loss by 18.58 per cent in 2016-17, yet it stood at Rs 25,045 crore and the number of loss-making CPSUs also increased from 79 in 2015-16 to 82 in 2016-17, it said.
"Based on the information scrutinised by the Committee, it has been observed that many of the loss-making CPSUs have a number of subsidiaries - some of them are running on losses and some of them are making profits," it said.
"While expressing concern over the huge loss of some CPSUs and also low rate of return on assets, the Committee has observed that there is an urgent need on the part of the management of the CPSUs for optimum utilization of their assets to generate better earnings particularly when CPSUs own valuable landed properties in prime locations and also enjoying the privilege of getting support of the government," said a press release issued by the Lok Sabha Secretariat.
Observing that constant technology upgradation is necessary to keep pace with the market demand and compete with the multi-national companies, the Committee recommended that the government should examine certain global models and ensure that principles of corporate governance are applied and adhered to by the Boards of CPSUs.
The Committee also wanted the government to examine various aspects and "realistically assess" the need to retain CPSUs in select sectors.
It also said that unless the CPSUs are given the desired level of independence which their counterparts enjoy in the private sector, they will not be able to compete in the market.
"The Committee, therefore, recommended giving sufficient autonomy to CPSUs so as to enable them to compete in the market particularly with the private players," the release said.
The Committee further recommended that the CPSUs' Board must be sufficiently empowered to take all strategic decisions such as formation or dissolution of partnerships/joint ventures, mergers/acquisitions, appointment of CEO, creation of below-board level positions, it said.
Such Board should be given a fixed term to make them more accountable and in the event of any lapses, accountability must be fixed for the Board/concerned ministry/department in their respective areas, the report said. (ANI)