Market cap of 81 PSUs zooms 225% in 3 years on capex, infra push: FM Sitharaman

Union Finance Minister Nirmala Sitharaman

The market capitalisation of 81 listed state-run companies have surged over 225 percent in the last three years, thanks to the boost to capital expenditure and infrastructure development, Finance Minister Nirmala Sitharaman said on May 8.

Sitharaman's statement comes against the backdrop of rising allegations in the run-up to the elections that the public sector undertakings (PSUs) were being dismantled and left in disarray in the current regime.

“Repeated claims from the @INCIndia ecosystem and @RahulGandhi in particular that Public Sector Undertakings (PSUs) are being dismantled & are in disarray under the current government are a textbook example of 'Ulta Chor Kotwal Ko Daante,' as the facts reveal a very different picture,” she said in a post on X.

The 81 listed PSUs include 62 central public sector enterprises (CPSEs), 12 public sector banks (PSBs), three state-run insurance companies and IDBI Bank.

"PSUs are thriving, benefiting significantly from the culture of professionalism infused in them along with increased operational freedom. The government’s focus on capital expenditure has also led to a substantial growth in their stock performance. Due to better management of PSUs, their share prices have increased tremendously in the last three years," the finance minister wrote on X.

Greater alignment of management incentives through performance-linked incentives,  capital management guidelines on dividends, buybacks, etc, and the calibration of the disinvestment strategy have helped improve the performance of the CPSEs and reposed investor confidence. The focus on infrastructure development, power, logistics, etc has directly benefited PSUs in railways, roads, power, metals, construction, heavy equipment manufacture, etc, she said.

“The returns by the Nifty CPSE index of nearly 78.8 percent have significantly outpaced Nifty 500 (27.4 percent) and Nifty 50 (22.5 percent). The market capitalisation of 12 listed PSBs has jumped 2.95 times (195 percent) from Rs. 5.45 lakh crore as on March 31, 2021, to Rs 16.12 lakh crore as on March 31, 2024,” she wrote.

The gross non-performing assets in PSBs have fallen to decadal lows of 3.2 percent, she added.

Comparing FY23 with FY14 

Total paid-up capital of all CPSEs stood at Rs 5.05 lakh crore as of March 31, 2023, as against Rs 1.98 lakh crore in FY 14, reflecting a surge of 155 percent. Total gross revenue from the operations of CPSEs in FY23 was Rs 37.90 lakh crore as against Rs 20.61 lakh crore in FY 14, an increase of 84 percent. The cumulative bottomline of profit-making CPSEs stood at Rs 2.41 lakh crore in FY 2023 as against Rs 1.29 lakh crore in FY14, showing an 87 percent surge.

Contribution of all CPSEs to the central exchequer by way of excise and customs duties, GST, corporate tax and dividends reached Rs 4.58 lakh crore in FY23 from Rs 2.20 lakh crore in FY14, making an spike of 108 percent. The net worth of all CPSEs increased from Rs 9.5 lakh crore as of March 31, 2014, to Rs 17.33 lakh crore as of FY23, an increase of 82 percent. Capital employed by all CPSEs reached Rs 38.16 lakh crore on March 31, 2023 from Rs 17.44 lakh crore on March 31, 2014, a growth of 119 percent.

Hindustan Aeronautics Limited

The market valuation of Hindustan Aeronautics Limited has zoomed 1,370 percent in merely four years, rising from Rs 17,398 crore in 2020 to Rs 2.5 lakh crore as of May 7, 2024, Sitharaman said. HAL on March 31, 2024, announced its highest-ever revenue of more than Rs 29,810 crore for FY 2023-24 and has a robust order book of over Rs 94,000 crore.

“These figures hardly suggest a 'weakening' institution, rather one seeing significant fortification. The increased defence spending and aim of achieving 'Atmanirbharta' in defence has fuelled the growth of PSUs like BEL, HAL, Mazagon Dock, etc. In FY 2023-24, India reported arms exports worth Rs 21,000 crore,” she said.

Air India

Air India has seen significant growth in employment opportunities, with over 7500 new employees (both flying and ground staff) having joined the company since privatisation. Air India is set to acquire 470 aircraft from Boeing and Airbus for its fleet expansion at an estimated cost of $70 billion, she said.

Neelachal Ispat Nigam Ltd

“A similar turnaround has happened in NINL (Neelachal Ispat Nigam Ltd) post-privatisation. There has been a perceptible turnaround in the operations of the plant. The plant started operations within three months of acquisition after October 2022,” Sitharaman said. A plan is being worked out for its expansion from 1 MTPA to 4.8 MTPA. With disinvestment, the unpaid employee dues of Rs 387.08 crore were paid to them, she added.

With inputs from Arindam Roy