Disinvested PSUs & their Profit/Loss Journeys: Part II – 2013-14 to 2018-19

In an earlier article, we looked at disinvestment history of various governments and the amounts earned through them. In this story, we look at the individual companies and their status at the time of disinvestment from 2013-14 to 2018-19.

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In Part -I, we looked at whether the Public Sector Undertakings disinvested during 2004-05 to 2012-13 were incurring profit or loss around the year of their disinvestment. In this article, we will look at the same for period 2013-14 to 2018-19.

Previous articles by Factly have outlined the various approached to disinvestment.

Year-wise Disinvestments

Now, let’s take a look year-wise break-up of disinvestments from 2013-14 to 2018-19. In the following table, the mode and type of transaction describes the way in which disinvestment was carried out (broadly discussed in previous articles). Residual equity with government describes the post-transaction equity of the government in the said PSU.

The data is sourced from the Department of Public Enterprises, from their Annual Year Books and Public Enterprises Survey Reports. s

Are these PSUs profit or loss making?

Now, let’s look at the trend of profit and loss for the disinvested PSUs. In the following table, the profit and loss data has been recorded for three consecutive years around the given year of disinvestment. All profit values are recorded as (+) entries and loss values as (-) entries.

*Data not available in Public Enterprise Survey Reports.

There are a few notable observations:

• While the majority of the PSUs disinvested from 2013-14 to 2018-19 were profit-making for the past few years, there were some PSUs that were incurring loss (discounting the unavailable data).
• Loss-making PSUs, at/around the year of their disinvestment, were:
  • Metals & Minerals Trading Corporation of India (MMTC Ltd.)
  • National Fertilizers Ltd.
  • State Trading Corp. of India Ltd.
  • Metal Scrap Trade Corporation Limited (MSTC Ltd.)
• With the exception of Axis Bank Ltd., Indian Tobacco Company Ltd. (ITC Ltd.),  and Larsen & Toubro Ltd., the post-transaction equity of the Government was more than 50% in all cases. In other words, the Government retained management control of these PSUs after disinvestment of minority stakes.

Featured Image: Disinvested PSUs