Ernst & Young was selected as the consultant. File | Image Credit: Reuters
The government of Tamil Nadu has selected Ernst & Young, a multinational consultancy firm, as the consultant for the financial and operational analysis of 50 selected Public Sector Undertakings (PSU) in the State.
The objective is to review the financial and operational past and current performances, through annual/quarterly reports, current board notes, medium-term vision statements and the performance trends of PSUs and Statutory Boards under the 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 Department of Finance (Bureau of Public Enterprises) was formed in 1982, with the objective of ensuring uniformity in the management policy of PSUs and Statutory Boards. The role of the BPE is to enable the enterprise to reach its stated goals in an efficient and sustainable manner, by analyzing the financial and operational parameters related to the organization. Based on the analysis of such parameters, the BPE provides inputs to the government directors on the Board of PSUs, before the board meetings. To assist these PSUs and Statutory Boards, the Finance Department has decided to engage the services of a consultant.
The consultant will study the past performance of approximately 50 selected enterprises based on published or readily available data for the last 10 years and benchmark performance among private sector competitors, taking half the number of selected business, on a cycle of three months.
In case past data is not available for any of the above 50 selected enterprises, the respective enterprise will be replaced by another one. The consultant will look at gross profit and net profit trends, revenue growth trends, return on equity and return on capital employed analysis, debt to equity analysis, interest coverage and cost of financing among others. parameters.
The consultant will also study the operational cost, cash management and cash flow statement analysis and contribution of various products to the company’s profit. It will also examine the contingent liabilities of the PSU and its impact on future finances, internal audit systems and broad matters to be covered in internal audits along with many other parameters, according to the Request For Proposal (PFP) prepared.
The consultant will simultaneously start working on the current performance of all State PSUs and Statutory Boards under the Finance (BPE) Department. Work includes review and analysis of board minutes and providing insights, succession planning, proposing board changes, merger possibilities with similar PSUs, advice on acquisition matters for PSUs, empanelment of companies and assisting BPE in capacity building / training of internal staff who can continue the above work.
Indicative List of PSUs for past performance studies
Tamil Nadu Tea Plantation Corporation
Tamil Nadu Adi Dravidar Housing and Development Corporation
Tamil Nadu Road Infrastructure Development Corporation
Tamil Nadu Small Industries Development Corporation
State Industries Promotion of Tamil Nadu
Tamil Nadu Industrial Development Corporation
MTC, SETC and TN State Transport Corporations
Poompuhar Shipping Corporation
Chennai Metrowater and TWAD Board