MFs Likely To Assist PSUs Earn Significant Addl Profits

New Delhi: The Government's decision to permit public sector Navaratna and Miniratna companies to infuse up to 30 per cent of their surplus cash reserves in public sector mutual funds may yield significant additional profits for these companies. There are 42 listed PSEs that comprise big names such as ONGC, SAIL, Indian Oil, NALCO, GAIL and NTPC along with a large number of public sector banks. According to estimates available from the Public Enterprises Annual Survey 2006-07 done by the Department of Public Enterprises, investment of 30 per cent of public sector reserves (that include all the 240 companies as well as loss-making ones) as on March 2007 could pump in Rs 45,204 crore into the capital markets through the mutual fund route.

The survey shows that Central public sector enterprises (CPSEs) have an aggregate cash balance of Rs 1,50,680 crore (including around 60,000 crore funds lying with the Navaratnas and Miniratnas) as on March 2007 and attracts an average interest of around 8 per cent annually. The data given by Value Research, the firm that tracks the Indian mutual fund market, shows that the real return from diversified mutual funds had actually been much higher than 12 per cent in recent years. On an annualised basis, return from mutual funds for a one-year period had been 27.02 per cent, for two years 31.05 per cent and for the past three years the annual return stood at 42.01 per cent. The combined market capitalisation of the listed 42 PSEs stood at Rs 8,66,879.47 crore in the beginning of August when the IPE study was conducted compared with Rs 7,52,337.75 crore in the beginning of the current financial year.

Source : www.indian-commodity.com