Market cap of PSUs falls by 27 pc in 6 months

Even if the government puts some of these PSUs on the block, the bidders will consider the stock market value as the first criterion before putting a value for the stock. Another section of the market, however, feels the fall in the market cap of PSUs was not restricted to PSUs alone as other shares and Sensex have also fallen during this period. With ministers blocking disinvestment in several key government companies like MTNL, HPCL and BPCL, it will not be surprising if the market cap of PSUs takes further beating.

The owners and senior management of private companies are responsible for the negative returns. In the same way, the government as owners of PSUs should be responsible for the fall in the market cap.

Government companies are not alone in minimising shareholders value in the stock markets. The Subhash Chandra group which owns Zee Telefilms has seen its market cap plummeting by 52 per cent to Rs 20,822 crore in the last six months. This was due to the sharp fall in the share price of Zee Telefims from Rs 1,630 to around Rs 450.

The Tatas, the leading business group in the country, were also in the forefront of giving negative returns to its shareholders. Thirty-one leading companies in the group showed a market cap of only Rs 16,791 crore, indicating a fall of Rs 6,885 crore, or 29 per cent, during the six-month period.

The KM Birla group, headed by Kumar Mangalam Birla, also witnessed an erosion in market cap. The market cap of six leading companies from the group declined from Rs 13,248 crore to Rs 11,720 crore, showing a fall of 12 per cent. The Hero group was another loser with its market cap falling 16 per cent to Rs 3992 crore.

On ther other hand, many business groups maximised the shareholders returns by notching up a higher market cap in the last six months. The Ambanis which control four companies showed a 45 per cent growth in market from Rs 48,794 crore to Rs 70,566 crore. The market cap of Shiv Nadar who controls the HCL group of companies has gone up by 81 per cent to Rs 27,237 crore. Other gainers include HDFC (95 per cent rise), Usha (96 per cent) and ICICI (86 per cent). Among multinationals, Unilever showed a 23 per cent rise in market cap to Rs 61,788 crore and ITC 19 per cent to Rs 20,775 crore. However, Beecham lost 37 per cent and Hoechst 53 per cent.