Govt to monitor PSU capex on monthly basis

The government has decided to monitor capital expenditure of all state-owned firms on a monthly basis and use surplus generated by them for buybacks or dividend payments.
It has mopped up the highest ever PSU disinvestment proceeds of Rs 25,020 crore in the 2015-16 fiscal, which ended today, aided by Rs 4,500 crore buybacks by Hindustan Aeronautics Ltd (HAL) and Bharat Dynamics Ltd (BDL).
"HAL and BDL have both decided to restructure capital keeping in mind surpluses as per provisions of Companies Act and in this process mobilised Rs 4,300 crore from HAL and Rs 200 crore from BDL. This has taken the total disinvestment proceeds to Rs 25,020 crore in current fiscal," Disinvestment Secretary Neeraj Gupta said.

Meanwhile, officials said the government is focusing on managing PSUs professionally and is also monitoring their investment plans for better returns.
"There will be monitoring of capital expenditure every month so as to keep tab on which PSUs are optimally using their cash balances and which are not," an official told PTI.
As per the Companies Act, firms can buyback up to 25 per cent of the paid up capital or free reserves in one year.

"This provision leaves 75 per cent surplus cash with them, which keeping in mind the zero or negligible leverage ratios has to be analysed critically," the official added.

HAL on March 30 did a buy back of 25 per cent of its paid up equity and free reserves amounting to about Rs 4,300 crore.
HAL, which had a cash and bank balance of Rs 17,671 crore, had capex plans for just Rs 800 crore and long term borrowings of just Rs 4 crore. Its profit after tax (PAT) stood at Rs 2,388 crore.
The net worth of the company stood at Rs 17.13 lakh crore, which offered it a large capacity to borrow. The company had paid dividend of Rs 480 crore.
BDL, which had a paid up equity of Rs 115 crore, did a 15 per cent buy back on March 29 which netted the government Rs 200 crore.

The PSU has a cash balance of Rs 3,669 crore and PAT of Rs 419 crore. BDL did not have any capex plans and had paid Rs 84 crore dividend to government.
"The government accepted the buyback offer to help to right six its capital given it has a high networth, low leverage ratio, large cash and bank balances not optimally utilised for business purpose in view of nominal capex," the official said.
In 2015-16, the government managed to garner the highest ever disinvestment proceeds of Rs 25,020 crore.
It had raised around Rs 24,500 crore in 2014-15 by selling stake in public companies; about Rs 16,000 crore in 2013-14 and Rs 23,960 crore in 2012-13. It had raised around Rs 14,000 crore in 2011-12 and over Rs 22,100 crore in 2010-11.