India’s Top PSUs 2019

1 Dun & Bradstreet India is pleased to present the 2019 edition of its publication, India’s Top PSUs . The publication gives aggregate insights on India’s leading Public Sector Undertakings (including banks and insurance companies) and includes detailed profiles of 169 such companies. In the years since independence, State-Owned Enterprises (SOEs), also called Government-Owned Enterprises, have played an important role in our country, specifically in two areas: they have provided balanced regional development and have played an important role in equitable redistribution of wealth and income. To achieve the target of making India a US$ 5 trillion economy, the government would like the SOEs to play a bigger role by increasing their contribution to 10% of GDP from the current level of 5%. To put this into perspective, in the last 10 years, the contribution of the SOEs has never been higher than 8% of GDP. Further, it has declined from 8% in FY08 to less than 5% in FY18. SOEs will have to reverse this downward trend and double their contribution in the next few years. Looking closely at the SOEs’ contribution to GDP, we have seen that 4 out of 339 SOEs contribute to 58% of the total GDP generated by all SOEs, another 16 contribute to 34%. Further, the next 12 contribute to 11%. These 32 enterprises contribute to more than 100% of GDP. How is this possible? The answer is that there are many enterprises that do not contribute, or contribute negatively to GDP. They contribute negatively to GDP as these enterprises run into losses, although admittedly, a few of them were set up for reasons other than commercial success. When the D&B team of economists studied Indian SOEs, we found three interesting aspects: two positive and one negative. The first positive is that large SOEs are more resilient than large private companies. For two decades, D&B has been tracking the Top 500 companies in India. For the cohort of the year 2000, we have seen that 71% of the SOEs stayed within the Top 500 after 10 years. The corresponding percentage was 52% for the private enterprises. The similar trend was followed by the cohorts of 2005 and 2010. The second positive is on a metric known as the Resource Governance Index, wherein countries have been ranked by transparency in natural resource management. India ranks amongst the top 10 countries. Globally and in India, most of the natural resources are managed by the SOEs. Indian SOEs have therefore performed better than SOEs in other countries on this metric. There is one negative as well and that is Corporate Governance. Research has been conducted by International Finance Corporation and BSE where they have given a corporate governance score to the BSE-100 companies. As expected, the multinationals and the institutionally owned and widely held organisations have high scores when it comes to corporate governance. There is a perception that family-owned businesses are relatively less transparent and therefore possibly less governed. The scores support that perception. When we look at government-owned organisations, they are a long way behind even family-owned organisations. Clearly, this is a space where the government-owned organisations can improve. There has been an improvement from 2015 to 2018, but they are still a long way behind others. I hope you will enjoy reading this publication and look forward to receiving your valuable feedback and suggestions. Manish Sinha Managing Director – India Dun & Bradstreet Preface