DIPAM Secretary raps underperforming PSUs' top management, said "We have a problem with the PSU stock valuation in the market"
"Idle assets do not contribute to Atmanirbhar Bharat, all assets should be gainfully employed to yield positive results"
"PSUs must focus on asset turnover ratio, Capital formation must yield sales" said Tuhin Kanta Pandey
New Delhi: (Disinvestment News) Now here is something coming from DIPAM Secretary that should ring a bell of caution for the underperforming PSUs' top management. “A point of concern is that between March and November, while the Sensex and the nifty have risen by about 50%, we have got a rise of only 19% in the CPSE index so CPSE index is underperforming behind the Sensex. We have a problem with the PSU stock valuation in the market. And we must also see if there’s something inherently problematic in the way we manage our companies, or is it something that the government can do, or is it some issues in the government policy that has led to this situation. We should do atmachintan. I think we have to introspect and ensure that the investors who are investing in public sector companies are also equally rewarded and are not shortchanged," said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) on Friday at an event hosted by CII.
Speaking via video conf. Pandey stressed on the need for increased market capitalisation as one of the key action areas for the Public Sector Enterprises going forward apart from a focus on asset turnover ratio and payment of interim dividends by PSUs. “PSUs must focus on asset turnover ratio. Capital formation must yield sales. Similarly, we should have a return on capital employed and return on equity as well,” he said.
Attacking on the ‘predictable and staggered’ dividend regime, Tuhin Kanta Pandey also made a case for higher accountability for PSUs to work on their market capitalization and asset monetisation. The engagement of top management of CPSE is important. Wherever they have been doing it consistently, transparently, engaging with investors, looking at their questions, explaining the reasons for what they are doing, there the investor community is rewarding them (CPSEs) with better share price," DIPAM Secretary further said.
The Modi government has been trying to sell non-core assets of PSUs for raising resources as well as for repayments of debt of the state-run companies. The focus on market capitalization comes amidst the government trying to privatise profit-making companies as well. “We want market capitalization improvement and asset monetisation as parameters in the MoU target PSUs sign with the government. Idle assets do not contribute to Atmanirbhar Bharat, all assets should be gainfully employed to yield positive results," he stated.
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