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BW Businessworld

Back With A Bang

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Public Sector Undertakings (PSUs) — those incredible temples that fuelled India’s adamant bid for self-reliance — may have lost their numero uno status in several sectors to private firms, but their relevance in a rapidly industrialising nation hasn’t diminished. That relevance is reflected in the BW Real 500, where four of the top five companies are PSUs, as are eight of the Top 20.
More interesting is the list of the top PSUs, once the numbers of the non-financial and financial companies are combined. Six of the top 10 and 14 of the top 20 PSUs are banks. The biggest of them all, State Bank of India (SBI), dominates the list, with its total assets-total income combo — at Rs 7,80,548 crore for FY 2007-08 — nearly double that of Indian Oil Corporation’s (IOC’s) Rs 3,98,905 crore, which holds the No. 2 position.

That is perhaps not as surprising given that public sector banks — which control about 76 per cent of the market — have traditionally dominated the still-regulated sector, and serviced the remotest parts of the country, areas where private banks are yet to make any inroads. They also employ a lot of people — SBI, for instance, has 800,000 employees compared to 24,000 for HDFC Bank and 40,000 for ICICI Bank.
However, it is not only the banks that have done well. Several top PSUs from other sectors have also shown admirable resilience in the face of stiff competition from slick, professionally-run private companies. Take, for instance, the four leading public sector oil companies — IOC, Oil and Natural Gas Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. They have performed exemplarily to be on top even as global crude oil prices have been on a swing during last year. Power major National Thermal Power Corporation, No. 6 in the BW Real 500, has developed itself as an integrated power major from a pure coal-based power generator.
Bharat Heavy Electricals (BHEL), No. 12 in the BW Real 500, secured its highest-ever orders worth Rs 50,270 crore in a single year, despite operating under intense competitive pressures from companies such as Alstom and Larsen & Toubro.

For Powergrid, a slot in the Top 20 (at No. 16) sits well, given that it accounts for about 45 per cent of the total power generated in the country. With transmission system availability at 99.65 per cent, this PSU is on a par with international utilities such as National Grid of the UK.
Then, Gail India, No. 18 in the BW Real 500, has set its eyes on becoming the largest supplier of piped gas to homes in the country. Also, with the India-US 1-2-3 nuclear agreement finally getting operationalised, this PSU is betting on big business.
Special mention must be made of the commendable human resource management of the PSUs. Each of the top 20 companies has withstood attrition in the face of huge odds, and provided shareholder value in a competitive environment. This, despite the pulls, pressures and constraints that a ‘government company’ tag inevitably brings.
(Businessworld Issue 21-27 Oct 2008)

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