Productivity of central public sector enterprises, when measured on parameters like capacity utilisation, inventory-to-sales ratio and energy use, has shown a mixed trend in recent years.
Measured on capacity utilisation, CPSEs? productivity has declined over the last three years. But their efficiency in terms of inventory management has improved. So far as energy efficiency is concerned, the picture is mixed.
According to the latest public enterprises survey, 48 (72%) out of a sample of 60 PSUs achieved capacity utilisation of more than 75% in the financial year 2010-11. Against that, only 40 (60%) PSUs reported a similar level of capacity utilisation in 2012-13. The number of PSUs with less than 50% capacity utilisation increased from 10 to 17 during the same period.
In the electricity sector, NTPC?s average capacity utilisation fell from 88.29% in 2010-11 to 83.08% in the 2012-13 due to factors like weak demand and fuel shortages. However, the Nuclear Power Corporation?s capacity utilisation increased from 71% to 80% during the same period owing to improvement in the availability of uranium after the India-US nuclear deal.
In the petroleum sector, average capacity utilisation of IndianOil?s refineries fell from 102% in 2010-11 to 100% in 2012-13. On the other hand, Hindustan Petroleum reported 107% capacity utilisation in 2012-13, higher than 100% in 2010-11.
In the heavy engineering sector, Bhel?s capacity utilisation of its turbine manufacturing facilities declined from 107% in 2010-11 to 96% in 2012-13. During the same period, utilisation of the PSU?s electrical machine manufacturing capacity tumbled from 76% to 65%.
While capacity utilisation is critical for the profitability of a manufacturing unit, the role of materials management is equally crucial. Efficient materials management helps in achieving a higher return on investment by minimising locked-up working capital and also in improving the cash flow and liquidity positions.
PSUs showed significant improvement in terms of inventory management during 2010-13. For example, inventory level for the CPSEs fell from 54 days in March 2011 to 49 days in March 2013. These figures do not include inventory held by the Food Corporation of India, the Cotton Corporation of India Ltd. and the Jute Corporation of India Ltd. as these PSUs make large-scale purchases and maintain stocks.
In the agriculture sector, the level of inventory in terms of number of days to cost of production/ turnover has come down from 94 days in March 2012 to 85 days in March 2013. Agro-based industries, chemicals and pharmaceuticals, consumer goods, fertilisers, and petroleum (refinery and marketing) are some other sectors where PSUs have seen an improvement in their inventory management.
However, the inventory level has gone up in sectors such as electricity generation, medium and light engineering, transport equipment and steel.
Energy conservation has gained popularity as a cost-saving measure among corporates in recent years and PSUs are no exception. However, not all PSUs have taken proactive measures to improve energy efficiency. For example, auxiliary power consumption for Nevyeli Lignite Corporation?s generating stations increased from 9.87% in 2011-12 to 10.61% in 2012-13. However, the PSU achieved some efficiency in generating electricity from lignite during the period. Its lignite consumption per unit of electricity generation came down from 1.16 kg/unit in 2011-12 to 1.09 kg/unit in 2012-13.
Steel PSU Rashtriya Ispat Nigam?s consumption of electricity per unit of production increased from 95.94 unit/tonne of crude steel produced (Tcs) in 2011-12 to 103.63 unit/Tcs in 2012-13. Similarly, its coking coal consumption per unit of production increased from 428.97 Kg/Tcs in 2011-12 to 444.65 Kg/Tcs in 2012-13.
Bhel?s electricity cost as a percentage of total production costs came down to 4.75% in 2013-13 from 4.89% in the preceding year. Its fuel oil cost was 0.09% in 2012-13, down from 0.23% a year ago. Upstream oil major ONGC saved R428 crore through energy conservation measures in 2012-13, up from R402 crore in the preceding year.
