SOE balance sheets: Reality far from rosy headlines
"Financial matters are not at their best in state-run companies. We are trying our best to rectify them," Asim said.
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By
Ahmed Naif
Headlines read: A state-owned enterprise (SOE) has earned billions of MVR in profit. Otherwise, the revenue swell into billions. Most of the time, the truth that the statistics say is far away. The picture created from flipping the pages of the sale book of state-owned companies is worrisome.
According to STO’s last quarter data for 2020, the government's largest company, is as follows:
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The company's revenue surged to MVR 18.2 billion last year
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However, the company spent MVR 16.1 billion on its operations
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Therefore, profit from running the company was MVR 1 billion.
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The company's profit margin compared to its earnings was 5.7%
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94.3% of the STO's revenue went towards expenses
According to Privatisation and Corporatisation Board (PCB) president Asim Mohammad, companies such as STO that are involved in oil trade were likely to earn higher revenues last year. The reason is that last year's increase in fuel prices also led to a rise in the price of crude oil. He added that the cost of sales of the company will go up as the global crude oil purchases increase.
"There will be a lot of cost-of-sales as high revenues. Then we will have to see if there is any increase in administrative expenses," Asim said.
"That's something to worry about if the administrative cost is going up."
As far as operational costs of STO are concerned, these costs are increasing year by year as well. The cost of running the company increased by MVR 242 million last year as compared to 2021. Here are the parts that saw an increase in expenditure last year:
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Marketing expenses – increased by MVR 126.7 million
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Administrative expenses - Increased by MVR 66.7 million
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Other operational expenses - Increased by MVR 14.7 million
That's something to worry about if the administrative cost is going up.
For MTCC, which runs some of the government's biggest infrastructure projects, here's a look:
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Received MVR 2.5 billion last year
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The company spent MVR 2.2 billion on its expenses
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Profit from operating the company stood at MVR 340.6 million
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That's 13% of the company's total revenue last year; the rest went to expenses
The company's operating expenses also increased by MVR 99 million in 2021 as compared to the same period last year. Administrative expenses have increased by MVR 103.5 million now.
PCB president Asim said that most companies do not have lower profits and other financial ratios as compared to the revenues of state-run companies. He added that the same concerns exist with the largest companies.
"We have always pointed out these things. Financial matters are not at their best in state-run companies. We are trying our best to rectify them," Asim said.
