Thursday, February 29, 2024

Meghalaya’s dysfunctional PSUs

Date:

Share post:

spot_img

In 2017, the Meghalaya Assembly Committee on Public Undertakings found that 15 of the 17 public sector undertakings (PSUs) were functioning but the cumulative losses incurred by the PSUs was to the tune of Rs 400 crore. Two PSUs had gone belly up while the rest relied on Government funds. Only three PSUs posted nominal profits but even they were not up to date with their accounts. The Comptroller and Auditor General (CAG) ticked them off time and again for failing to update their accounts. Indeed, book-keeping and internal auditing has always been a major challenge with PSUs. The reason is because those who run them are not accountable to shareholders since the only shareholder is the Government which does not seem to care about the losses.

PSUs fail for many reasons but mainly because they are not run professionally. Their book-keeping is irregular and many don’t post their profit and losses in the public domain because they keep making losses. Second, they are not led by people with management experience but by bureaucrats who also head other departments and are therefore temporary managers. Third, they employ far too many employees when the principle of all profit-making companies is “lean and mean.” This means employing only as many as are needed and extracting work out of every employee. Outcome must equal or exceed input. That’s not the case with PSUs. Those who manage these companies are not accountable to the Board of Directors as private companies do where profit and efficiency both matter a lot.

Take the case of the Mawmluh Cherra Cements Ltd (MCCL) which has all the potential to be a leading cement producer but poor management over the years had turned the Company into a sick undertaking incapable even of paying salaries to its employees. The same is the case with the Meghalaya Electrical Corporation Ltd and its subsidiaries. When the Government underwrites the losses made by PSUs it is only to be expected that the management will continue to post losses. After all, the Government does not have to share profits with the Board of Directors who are supposed to be shareholders in the Company.  The Chief Executive Officers and Directors on the boards of state PSUs are all political appointees or bureaucrats who don’t have the wherewithal to manage the boards/corporations. As of December 2019, the cumulative losses posted by these PSUs were to the tune of Rs 410 crore.  This includes the MCCL.  What has added to the woes of the state-owned cement company is that it has to compete with a business-savvy private sector. Can the Government continue to bear the losses incurred by PSUs especially at this juncture of scarce finances?

Previous article
Next article
spot_img

Related articles

Apple’s shift from EVs to AI draws diverse reactions among influencers

New Delhi, Feb 29:  A rise in discussions related to "Apple" among influencers on the "X" platform has...

Commerce Ministry makes auction route must for dust tea in India

Guwahati, Feb 29:  The Union Ministry of Commerce and Industry has made it mandatory for dust grades of...

Pakistan struggling to arrange $1.8 billion for repayment of Chinese loan

Karachi, Feb 29: Pakistan's foreign exchange market is tense on reports about the expected higher dollar outflows, local...

Shahjahan’s arrest opens the field for Oppn parties in Sandeshkhali

Kolkata, Feb 29: The ground realities seem to be changing at Sandeshkhali in North 24 Parganas district, where...