PSUs leave govt poorer by Rs 1.47 lakh cr

Jagannadham Thunuguntla,equity head at SMC Capitals,said: “The reasons for underperformance by few PSUs are based on case-to-case basis. For instance,the stocks such as NTPC and NHPC have underperformed as the whole power sector has been underperformed on the capital market last year on the back of long gestation period involved in the power projects. The stocks of the oil marketing companies have been lacklustre during the year owing to ongoing uncertainty in the government’s deregulation policy on fuel prices. Further,the underperformance was seen in stocks such as MMTC. However,this may not be seen as an underperformance as the stock prices were based on very limited float available in the open market with the government holding in these companies as high as 99%.”

The promoters of three most valued PSU firms — MMTC,SAIL and NMDC — have lost significantly last year.

Government holding in MMTC is 99.33%,while in NMDC it is 90%. Its holding in SAIL is over 85%,and in NTPC it is 84.5%. Bhel and ONGC have government holdings of 67.72% and 74.14%,respectively.

Trading giant MMTC has lost significant amount of wealth with the government stake in the company now Rs 55,000 crore lower than it was on January 4,2010. From a price of Rs 1,727.51 on January 4,2010,the share is currently worth Rs 1,169.05.

The environment for PSU stocks has not been favourable with most of them recording substantially negative returns than the broad market. Nearly 50% of PSUs showed a decline in market capital during the period.

While Sensex rose 17% to 20,561.05 in the said period,the BSE PSU index lost 1.15%,to 9,516.36 from 9,627.49. Though the share price increase has been spectacular in some cases,this has not translated into larger wealth creation for the government given the inherently small size of the firms.