T.N. gets consultant to benchmark performance of 50 public sector undertakings against private competitors

Ernst & Young, the consultancy firm, will analyse past and current performance of the selected PSUs and benchmark performances with those of private sector competitors, gross and net profit trends, revenue growth trends, and an analysis of return on equity and return on capital employed will be among the parameters analysed

The Tamil Nadu government has chosen Ernst & Young, a multinational consultancy firm, as a consultant for the financial and operational analysis of 50 selected Public Sector Undertakings (PSUs) in the State.

The objective is the financial and operational analysis of past and current performances, through annual/quarterly reports, current board notes, medium-term vision statements and the performance trends of the PSUs and Statutory Boards under Bureau of Public Enterprises in Tamil Nadu. The consultant will also act as a project management unit in the Finance (BPE) Department, sources said.

The Finance (Bureau of Public Enterprises) Department was formed in 1982, with the intention of ensuring policy uniformity in the management of PSUs and Statutory Boards. The role of the BPE is to enable the enterprise to reach its stated objectives in an efficient and sustainable manner, through the analysis of financial and operational parameters relevant to the organisation. Based on the analysis of such parameters, the BPE provides inputs to the government directors on the Board of PSUs, prior to board meetings. To assist these PSUs and Statutory Boards, the Finance Department has decided to utilise the services of consultant.

The consultant will study the past performance of about 50 selected enterprises based on published or readily available data for the last 10 years and benchmark performances with those of private sector competitors, taking half the number of selected enterprises, in a cycle of three months.

In case past data is unavailable for any of the above 50 selected enterprises, then the respective enterprise will be replaced by another. The consultant will look into gross profit and net profit trends, revenue growth trends, analysis of return on equity and return on capital employed, analysis of debt to equity, interest coverage and financing cost among other parameters.

The consultant will also study the operational cost, cash management and cash flow statement analysis and contribution of various products to the profit of the company. It will also analyse contingent liabilities of the PSU and its impact on future finances, systems of internal audit and broad items to be covered in internal audits among many others parameters, according to the Request For Proposal (PFP) that has been prepared.

The consultant will also simultaneously start work on current performance of all the State PSUs and Statutory Boards under the Finance (BPE) Department. The work will include review and analysis of board notes and providing insights, succession planning, suggesting of changes to the board, possibilities of mergers with similar PSUs, advice on procurement matters for the PSUs, empanelment of firms and assisting the BPE in capacity building /training internal staff who could take the above work forward.