Cost AdvantageHow badly public sector units PSUs compare with their private counterparts is well-known. What's less known, is where thi...
Written by IE NEWS SERVICE
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Cost Advantage How badly public sector units PSUs compare with their private counterparts is well-known. What8217;s less known, is where this disadvantage manifests itself and the extent. A study by Bhandari and Goswami quantifies this. It appears that PSUs spend, on an average, an additional 8 per cent of their total revenue on energy costs, 11 per cent more on wages and 4 per cent more on interest.
And while they do make up a bit on cheaper raw material costs, their ability to erode their advantages is stupendous. Not surprisingly, if you take the non-oil public sector units, the average PSU profitability was minus 4.3 per cent in 1997 as compared to 6.2 per cent for the private sector.
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