From all my posts if you have come to the conclusion that I am against PSU companies, you may not be very wrong.
Are the employees in these companies to be blamed for their plight?
Yes and No.
I have known extremely committed and well meaning PSU employees. I used to know a person in one of the oil majors – and I would think of him as an authority of risk. In one of the deals with an Indian corporate he saved Rs. 200 crores (we are talking 1998-9 figures). Obviously he did not get any recognition for this.
Now I also know the kind of expenses that are thrust on PSU organisations – which leads me to believe that these organisations can NEVER be run on professional or commercial lines. Imagine that for such a long period of time Air India never suggested setting up a pilot academy. I also know of a contract in which a psu pays 4x the price which its competitors pay.
Surely the top management knows this. So the lethargy percolates.
Yesterday I made the mistake of travelling Chennai-Mum by AI. It was 3 hrs late, no apologies on the ground or after we boarded. There was one guy – perhaps from the Civil aviation ministry throwing his weight around, but the crew handled him well. My full sympathies for the honest, hard working and enthu workers of a psu.
However given a choice I will not invest in them. I have made money in holding SBI from Rs. 90 to 2k+, Ntpc, Coal India (still holding), Ongc, Engineers India. Still planning to add Ntpc…but only as a yield stock as and when it gets attractive.
How does the market react to all this? Simply by giving a lower p/e ratio
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