Public sector undertakings are flush with cash.
R Chandrasekaran
CHENNAI: The government-controlled companies are sitting with a big cash pile at the end of the fiscal year ended March. However, these companies seem to be not interested in planning a take-over of any company in the same sector either in India or abroad.
A total of Rs.1620 billion cash is lying with the 17 big public sector undertakings of the union government. Coal India Ltd. tops the list for having a huge cash pile of Rs.437.76 billion. This is followed by Oil & Natural Gas Commission (ONGC) with Rs.224.5 billion, National Mineral Development Corporation (NMDC) with Rs.172.3 billion and National Thermal Power Corporation with Rs.161.85 billion.
The disclosure of the cash pile came from none other than the Minister of State for Finance Namo Narain Meena in Parliament. Other big companies include Oil India Ltd. and Steel Authority of India Ltd. for having big cash and bank balance of Rs.117.7 billion and Rs.132.07 billion, respectively.
Despite having a big cash pile under its kitty, ONGC’s plan to buy a stake in ConocoPhillips’ Kazakhstan oil field for approximately $5 billion may fail to sail through. This is reportedly due to the Indian government’s failure to convince Kazakhstan to support the deal.
A Caspian Sea field, Kashagan will likely produce 370,000 barrels of oil a day, and is scheduled to commence its output by September.
Kazakhstan is reportedly mulling over a move to pre-empt rights to acquire ConocoPhillips’s 8.4 per cent interest in the country’s largest oilfield, Kashagan, before it divests it to a Chinese company.
The Indian government has not been as aggressive as its Chinese counterpart in engaging at the highest levels to see that the deal is through. Therefore, there is a strong possibility that ONGC could miss the deal probably due to government’s apathy.
Interestingly, ONGC struck a deal in November, but the Cabinet is yet to approve the deal. One of the possible reasons for the government’s lukewarm response could be its fear of losing big chunk of outflow at a time when the current account deficit is posing a biggest risk to Indian economy.
Strangely, the minister told Parliament that the funds will be used for commercial purposes that include dividend payment, discharge of liabilities, capital expenditure, working capital and expansion.
While the possibility of expansion is always there for any big ticket company in India, spelling out such plans seem to be missing.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com