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Last updated on : 15/05/2012

Capital Restructuring

The Controller General of Accounts is responsible for evaluating and processing the proposals relating to the capital restructuring of various public sector undertakings (PSUs) of the Union Government and its submission to the Ministry of Finance for obtaining approval of government of India.  Generally the proposals involve appraisal of the strategy proposed for reviewing the unit.  Each proposal is evaluated on the basis of company specific options available.  In evaluating these proposals a clear distinction is made between the Government’s role as a regulator and its commercial interests as owner of an industry participant.

The appraisal of these proposals is a comprehensive one involving the following:

  • Detailed analysis of the financials of the PSU, especially it’s operating costs. 
  • Audit of the financial model prepared by the PSU.
  • Preparation of a detailed financial model containing projections and sensitivities.
  • Bench marking the performance of the company vis-à-vis its peers from the private sector and public sector.
  • Appraisal of the Rehabilitation scheme prepared by the Operating Agency appointed by the Board of Industrial and Financial Restructuring.
  • Analysis of the stock returns – PE ratios, PB ratios and PCF ratios for the PSUs vis-à-vis private sector competitors, where the proposal is for conversion of equity into debt in order to improve returns to private stockholders.

Detailed Studies done by CGA’s Office