Financial Performance of State Level Public Enterprises in Uttar Pradesh (original) (raw)

The paper makes a critical analysis of the financial health of the SLPEs of Uttar Pradesh and attempts to contribute policy suggestions. As far as the methodology is concerned financial and operating ratios have been used to analyse the financial health of these commercial entities. Four types of financial ratios have been applied in the process, namely liquidity ratios, profitability ratios, leverage ratios and asset management ratios. Thus the paper provides an analytical study of the financial health of the 40 SLPEs of Uttar Pradesh on the basis of financial and operating ratios computed from the latest available data i.e. from 2008-09 to 2011-12 from the Bureau of the Public Enterprises, UP. Analysis of the financial performance of energy sector SPSUs and non-energy sector SLPEs reveals that while the later earned a net income during all the four years, the energy sector SLPEs incurred huge losses. The operating performance SLPEs during the period showed that 31 out of 36 SLPEs were earning profit during the period, though in many cases the profit was small or nil. Select financial ratios show low return on capital, negative net worth, low gearing, poor utilization of financial resources and low labour productivity. It has been concluded with relevant empirical findings that the SLPEs are putting a serious financial burden on the state budget and many of them are not serving the purpose for which they were set up especially.