CPSEs Post 47% Profit Growth in FY24, Driven by Petroleum Sector Surge

The Central Public Sector Enterprises (CPSEs) have made a strong recovery, posting a 47% growth in net profit for FY24, rebounding from a 15% decline in FY23. This impressive performance was largely driven by a surge in profits from petroleum sector firms.

Operating CPSEs, totalling 272, reported a combined net profit of Rs 3.22 lakh crore in FY24, up from Rs 2.18 lakh crore in FY23. The oil sector played a major role in this growth, with Oil and Natural Gas Corporation (ONGC) recording the highest profit at Rs 40,526 crore, a slight increase from the previous year. Indian Oil Corporation (IOC) followed closely with a remarkable 3.8 times profit growth, reaching Rs 39,619 crore.

However, not all CPSEs performed equally well. Bharat Sanchar Nigam Ltd (BSNL) was the top lossmaker, reporting a loss of Rs 5,371 crore in FY24, followed by Rashtriya Ispat Nigam Ltd (RINL) with a loss of Rs 4,849 crore.

In terms of dividends, CPSEs declared a total of Rs 1.23 lakh crore in FY24, a 16.3% increase compared to Rs 1.05 lakh crore in FY23. Despite the overall growth in profits, the gross revenue of operating CPSEs declined by 4.7% to Rs 36.08 lakh crore in FY24.

A major highlight for the year was the surge in market capitalization (M-cap) of listed CPSEs. The total M-cap of 66 listed CPSEs soared by 121%, reaching Rs 37.23 lakh crore as of March 31, 2024, compared to Rs 16.85 lakh crore the previous year. Key contributors to this growth included NTPC, ONGC, Hindustan Aeronautics, Coal India, and Indian Railway Finance Corporation.

The wage bill for CPSEs also saw an uptick, with salaries and wages rising nearly 4% to about Rs 1.72 lakh crore in FY24. The number of regular employees, however, fell by 3.1% to 0.81 million, while contractual employment grew by 8.8% to 0.7 million. This trend reflects a broader shift in the corporate sector towards hiring more contractual workers to reduce wage bills. Chief Economic Adviser Anantha Nageswaran recently flagged this shift, noting the potential impact on consumption due to the uncertainty associated with contractual jobs.

Research and Development (R&D) expenditure by CPSEs also saw significant growth, rising nearly 50% to Rs 10,813 crore in FY24, up from Rs 7,233 crore in FY23. Indian Oil, Hindustan Aeronautics, Bharat Heavy Electricals, ONGC, and Hindustan Petroleum Corporation were the top five contributors to R&D spending.

The strong performance of CPSEs in FY24 marks a year of recovery and growth, particularly in the oil and gas sector, while also highlighting the evolving trends in employment and R&D investment across the public sector.