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Given Narendra Modi’s track record with state-owned enterprises in Gujarat, as reflected in their financial and stock performances, foreign brokerage CLSA expects ‘better days’ for larger central public sector undertakings (PSUs) if Modi becomes the country’s next PM, reports fe Bureau in Mumbai. In a strategy note, CLSA notes that Gujarat’s PSUs are amongst the most profitable. It cites some turnaround stories, including that of Gujarat State Fertilizer Company, which reported losses of R400 crore in the 2003 fiscal but now makes a return on equity of 15%, after bureaucrats were given a free hand to turn the company around.
“Some successful turnaround stories raise hopes for the likes of an MTNL and PSU banks," CLSA analysts wrote. It added that ?SU banks also stand to benefit if the banks are allowed to work without political interference and are made more efficient through technology upgradation." With reference to Modi's recent comments on empowering the management of government-owned companies, the brokerage reckons that while such a measure would benefit companies like Coal India, it will also lead to greater competition. CIL, the world's largest coal miner, missed both its production and sales targets for 2013-14 by 20 million tonnes each. CLSA sees the state-owned oil marketing companies like HPCL, BPCL and IOCL benefiting from potentially lower oil subsidies.