Unable to face competition of a liberalised environment, as many as 88 public sector undertakings have eroded networth due to heavy accumulation of losses till March 2005, a report of Comptroller and Auditor General of India said.
"Their (88 companies) accumulated losses were Rs 82,001 crore (Rs 820.01 billion) against investment of Rs 14,469 crore (Rs 144.69 billion) as on March, 2005, making their networth negative," the CAG said in its report tabled in Parliament recently.
Given the aggregate networth, 88 PSUs have become negative to the tune of Rs 65,800 crore (Rs 658 billion) and CAG has expressed doubt over the recovery of loans amounting Rs 34,295 crore (Rs 342.95 billion) given by the Centre to 58 companies.
The total losses of 125 PSUs rose by Rs 3,571 crore (Rs 35.71 billion) to Rs 85,357 crore (Rs 853.57 billion) till 2004-05 as most of the companies that grew in a non-competitive environment are facing difficulty in the competitive world after the economy has been liberalised.
While some PSUs are learning to survive by adapting to the changing environment, a large number of them are beset with serious problems like slow growth, inefficient management, low productivity, inadequate research and development, lack of marketing and shortage of working capital.
Out of the 88 companies, 52 have been referred to the Board for Industrial Financing and Reconstruction, which has recommended closure or sale of 19 PSUs and approved 14 companies for revival package, while 19 cases are under various stages of processing.
The PSUs whose equity capital has eroded includes Eastern Coalfields, Bharat Coking Coal, Konkan Railway Corporation, Fertiliser Corporation of India, Hindustan Fertilisers Corporation and Indian Airlines.
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