Public Sector Undertakings

1. National Thermal Power Corporation (NTPC)

NTPC is the largest power generating company in India. NTPC was incorporated on 7th November, 1975 with
the objective of building large size thermal power stations, along with associated transmission systems, to
accelerate the integrated development of power sector in the country. Acknowledging contribution of NTPC to
the entire power industry, NTPC was conferred the status of Navratna Company in 1997.

NTPC became a listed Company in 2004. In 2005, the company was renamed as 'NTPC Limited' in line with
the changes taking place in the business portfolio of the company, transforming the company from a thermal
power generator to an integrated power company with presence across entire energy value chain through
diversification and backward & forward integration. NTPC has made foray into Hydro power, Coal mining,
Power trading, Ash business, Equipment manufacturing, Renewable energy, Power distribution, etc.

On 19th May, 2010, NTPC was granted the coveted status of 'Maharatna Company' by Govt. of India to make
it a global giant in line with its vision "To be the world's largest and best power producer, powering India's
Growth".

NTPC has authorized share capital of Rs. 10,000 crores and the Paid up capital is Rs. 8,245.5 crores.

NTPC's installed capital upto 31st March, 2012 is 37,014 MW including 4,364 MW under joint
ventures/subsidiaries, comprising 31,119 MW from coal based power plants at twenty one locations and 5,895
MW from combined cycle gas/ naphtha based power plants at eight locations. NTPC's share on 31st March,
2012 in the total installed capacity of the country is 18.52% (including JVs/ Subsidiaries) while it contributed
27.57% (including JVs/ Subsidiaries) of the total power generation of the country (without Bhutan import)
during 2011-12.

For further details, please surf the site at :http://www.ntpc.co.in

2. National Hydroelectric Power Corporation (NHPC)

National Hydroelectric Power Corporation Ltd. (NHPC) was incorporated in 1975 under Companies Act,
1956. The mission of NHPC is to harness the vast hydro, tidal and wind potential of the country to produce
cheap/ pollution-free and inexhaustible power. NHPC would play a significant role in the integrated and
efficient development of hydroelectric, tidal and wind power in the Central sector covering all aspects such as
investigation, planning, designs, construction, operation and maintenance of hydroelectric, tidal and wind
power projects. NHPC is a schedule A enterprise of the Government of India with an authorized share capital
of Rs. 5,000 crores. With an investment base of over Rs. 10,000 crores, NHPC is among the top ten companies
in the country in terms of investment.

For further details, please surf the site at : www.nhpcindia.com

3. Rural Electrification Corporation (REC)

Rural Electrification Corporation (REC) was set up in 1969 with the primary objective of providing financial
assistance for rural electrification in the country. REC was declared a Public Financial Institution under
Section 4-A of the Companies Act in 1992. In February 1998. the Corporation was registered as a Non-
Banking Financial Company under Section 45-1A of the RBI Act, 1934. The authorized share capital of the
Corporation is Rs. 800 crores. During the year 1998-99 Government of India has contributed Rs. 50 crores
towards the share capital of the Corporation increasing its paid up capital to Rs. 680.60 crores as on
30.11.1998.

Rural Electrification Programmes financed by the Corporation cover electrification of villages, including tribal
villages and Dalit Bastis, energisation of pump sets, provision of power for small, agro-based and rural
industries, lighting of rural households and street lighting. The Corporation has also been providing assistance
to the State Electricity Boards for taking up system improvement projects for strengthening and improving
sub-transmission and distribution system and small generation projects like wind energy and hydel projects. In
addition, under Kutir Jyoti programme in 1988-89 by the Govt. of India, one time initial cost of internal wiring
and service connection charges up to a maximum limit of Rs. 1000 .00 per connection with installation of
meter or Rs. 800 per connection without meter is provided to rural households below poverty line as grant
through the State Govts./ SEBs.

PPP
The publicprivate partnership (PPP or 3P) is a commercial legal relationship defined by the Government
of India in 2011[1]as "an arrangement between a government / statutory entity / government owned entity on
one side and a private sector entity on the other, for the provision of public assets and/or public services,
through investments being made and/or management being undertaken by the private sector entity, for a
specified period of time, where there is well defined allocation of risk between the private sector and the public
entity and the private entity receives performance linked payments that conform (or are benchmarked) to
specified and pre-determined performance standards, measurable by the public entity or its representative".
The Government of India recognizes several types of PPPs, including: User-fee based BOT model,
Performance based management/maintenance contracts and Modified design-build (turnkey) contracts. Today,
there are hundreds of PPP projects in various stages of implementation throughout the country.
As outlined in its XII Five Year Plan (20122017), India has an ambitious target of infrastructure investment
(estimated at US$1 trillion). In the face of such an enormous investment requirement, the Government of India
is actively promoting PPPs in many sectors of the economy. According to the World Bank, about 824
PPP projects have reached financial closure since 1990 in India.

PPP policies[edit]
The Ministry of Finance centralizes the coordination of PPPs, through its Department of Economic Affairs'
(DEA) PPP Cell. In 2011, the DEA published guidelines for the formulation and approval of PPP projects.
This was part of an endeavor to streamline PPP procedures and strengthen the regulatory framework at the
national level to expedite PPP projects approval, reassure private parties and encourage them to enter into PPPs
in India. This was one of the main roles of the Public Private Partnership Appraisal Committee
(PPPAC) which is responsible for PPP project appraisal at the central level.
The Government also created a Viability Gap Funding Scheme for PPP projects to help promote the
sustainability of the infrastructure projects. This scheme provides financial support (grants) to infrastructure
projects, normally in the form of a capital grant at the stage of project construction (up to 20 percent of the
total project).
The Government has also set up India Infrastructure Finance Company Limited (IIFCL) which provides long-
term debt for financing infrastructure projects. Set up in 2006, IIFCL provides financial assistance in the
following sectors: transportation, energy, water, sanitation, communication, social and commercial
infrastructure.
To help finance the cost incurred towards development of PPP projects (which can be significant, and
particularly the costs of transaction advisors), the Government of India has launched in 2007 the 'India
Infrastructure Project Development Fund' (IIPDF) which supports up to 75 % of the project development
expenses.
Finally, the PPP Cell has produced a series of guidance papers and a 'PPP Toolkit' to support project
preparation and decision-making processes. The objective is to help improve decision-making for
infrastructure PPPs in India and to improve the quality of the PPPs that are developed. The tookit has been
designed with a focus on helping decision-making at the Central, State and Municipal levels.

OBJECTIVE
In order to carry out their audit objectively and without bias, public auditors must develop a deep
understanding and appreciation of the basic objectives of Public Private Partnerships. In the
words of the The National PPP Policy Framework of Australia (December, 2008), the PPP
policy provides a framework that enables public and private sectors to work together to improve
public services delivery through private sector provision of public infrastructure and related
services. According to the above Framework, the objectives of PPP are to: - Encourage private
sector involvement in public infrastructure and related services where value for money for the
government could be clearly demonstrated. - Encourage innovation in the provision of
infrastructure and related service delivery. - Encourage rigorous governance over the selection of
projects and competition for the award of contracts. - Clearly articulate accountability for
outcomes.
To put it more succinctly, PPP projects are aimed to provide improved public services by
sharing risks in a balanced manner. These are also intended to result in enhanced value for
money for the public agencies concerned through cost effective designing and technology as
well as better project management. These are achieved by following a fair and transparent
selection process, fair and reasonable incentives to all stakeholders, assurance of value for
money and implementation through long-term contracts. Innovation is the key to the success of
PPP project

Government Infrastructure Projects (PPP) that were either under 'Pre-construction Stage', Under
Construction or Operation and Maintenance Stage as on April 1, 2011 or Awarded thereafter and with
Project Cost >INR 5 crore.
Government Infrastructure Projects (Traditional Procurement) that were under 'Pre-construction
Stage', or Under Construction as on April 1, 2012 or Awarded thereafter and with Project Cost >INR
50 crore; and
 Private Sector Projects that were under 'Pre-construction Stage', or Under Construction as on April 1,
2012 or Awarded thereafter and with Project Cost >INR 50 crore.

JOINT VENTURE

A joint venture involves two or more businesses pooling their resources and expertise to achieve a particular goal.
The risks and rewards of the enterprise are also shared.

The reasons behind forming a joint venture include business expansion, development of new products or moving
into new markets, particularly overseas.

Your business may have strong potential for growth and you may have innovative ideas and products. However, a
joint venture could give you:

more resources
greater capacity
increased technical expertise
access to established markets and distribution channels
Entering into a joint venture is a major decision. This guide provides an overview of the main ways in which you
can set up a joint venture, the advantages and disadvantages of doing so, how to assess if you are ready to commit,
what to look for in a joint venture partner and how to make it work

TYPES OF JOINT VENTURE

One option is to agree to co-operate with another business in a limited and specific way. For example, a small
business with an exciting new product might want to sell it through a larger company's distribution network. The
two partners could agree to a contract setting out the terms and conditions of how this would work.
Alternatively, you might want to set up a separate joint venture business, possibly a new company, to handle a
particular contract. A joint venture company like this can be a very flexible option. The partners each own shares in
the company and agree on how it should be managed.
In some circumstances, other options may work better than a business corporation. For example, you could form
a business partnership. You might even decide to completely merge your two businesses.
To help you decide what form of joint venture is best for you, you should consider whether you want to be involved
in managing it. You should also think about what might happen if the venture goes wrong and how much risk you
are prepared to accept.

JOINT VENTURE - BENEFITS AND RISKS

Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term
projects.

A successful joint venture can offer:

access to new markets and distribution networks

increased capacity
sharing of risks and costs with a partner
access to greater resources, including specialised staff, technology and finance
 A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover
part of what you do, thus limiting the commitment for both parties and the business' exposure.

Joint ventures are especially popular with businesses in the transport and travel industries that operate in different
countries.

The risks of joint ventures

Partnering with another business can be complex. It takes time and effort to build the right relationship. Problems
are likely to arise if:

the objectives of the venture are not 100 per cent clear and communicated to everyone involved
the partners have different objectives for the joint venture
there is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
different cultures and management styles result in poor integration and cooperation
the partners don't provide sufficient leadership and support in the early stages
Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be
followed up with effective communication of the business plan to everyone involved.

PSU OBJECTIVES
In India, public enterprises have been assigned the task of realising the objectives laid down in the Directive
Principles of State Policy.

Public sector as a whole seeks: (a) to gain control of the commanding heights of the economy, (b) to promote
critical development in terms of social gain or strategic value rather than on consideration of profit, and (c) to
provide commercial surplus with which to finance further economic development.

The following points highlight the seven crucial objectives of public sectors in a mixed
economy.

Objective # 1. Transformation of the Economy:

Imme-diately after attaining Independence the Govern-ment declared that India was going to
have a so-cialist pattern of society.

The public sector was supposed to transform the economy in such a fash-ion that it could move
towards socialism. It was felt that if development is to proceed at the de-sired rate and to
contribute effectively to the at-tainment of the larger socio-economic goals, the public sector
must grow not only absolutely but also relatively to the private sector.

Objective # 2. Redistribution of Income and Wealth:

It is needless to argue that the basic goal of a social-ist pattern of society could not be achieved
with-out improving the existing pattern of income and wealth distribution. This is possible by
raising in-comes at low levels, while simultaneously reduc-ing it at the top.

As J. S. Uppal has rightly com-mented:

Public sector and other public policies will seek to reduce inequalities of income and achieve a
more equitable distribution through land reforms, ceiling on urban property, an appropriate tax
structure and fiscal policy, channelisation of profits to the Government, which will be spent for
welfare of the weaker sections, regulation of in-comes of top executives in public enterprises and
discriminatory price policies for mass consumption goods.

Objective # 3. Source of Capital Formation:

There is no denying the fact that one of the major determi-nants of the rate of economic growth
and the pat-tern of income and wealth distribution is the man-ner of utilisation of profits from
business enter-prises. In private enterprises, profits are distrib-uted largely among shareholders
who are already well-off. This results in inequality in distribution of income and wealth.

In public sector enterprises, a major portion of undistributed profit is ploughed back for
expansion or diversification (i.e., setting up of new enterprises to produce new products) or, for
building a strong and viable socio-economic infrastructure for the benefit of all. Therefore one of
the important goals of public sector enterprises in India has been promotion of capital formation.
This has, no doubt, been achieved to some extent.

Objective # 4. Development of Socio-Economic Infra-structure:

The inadequacy, if not complete ab-sence, of socio-economic infrastructureespe-cially in basic

and heavy industries and transport and communication facilitiesis the proximate cause of
economic backwardness of LDCs. In fact, one of the major obstacles to Indias economic
development has been the relative absence of ba-sic and heavy industries.

Since the development of infrastructural industries requires huge initial investment, involves
long gestation period and yields very low initial return, private investors turn away from such
investment projects. So it is in the rightness of things for the public sector to develop those
industries in which private sector is unable and unwilling to put the resources required and
undertake the risks involved.

Objective # 5. Achievement of Balanced Regional De-velopment:

One of the declared objectives of the Government of Indias industrial policy has been to achieve
balanced regional development. So the Government has consistently stressed the need to reduce
regional inequalities by encouraging the location of public undertakings in economically
backward regions.

The steps taken to achieve this objective, through public enterprises, include:

(a) grant of credit at a concessional rate through public enter-prises,

(b) provision of an integrated infrastructure such as electricity, transport and water,

(c) special consideration for setting up public sec-tor industrial undertakings in backward areas
and preference to backward areas in licensing of in-dustries.

Objective # 6. Reduction of Concentration of Wealth and Economic Power in Private Hands:

Increased national output is not enough. The fruits of progress must be shared by all sections of
society. To en-sure this it is necessary to remove, or reduce, con-centration of wealth and
economic power in pri-vate hands. In fact, discouraging concentration of economic power and
preventing the growth of monopolies and big business have been the de-clared objectives of the
Government throughout the plan period.

The 1956 Resolution emphasised the urgency of reducing disparities in income and wealth and
preventing private monopolies and the concentration of economic power in different fields in the
hands of a small number of persons. Besides emphasising the need to strengthen the public
sector for achieving this goal, the resolution also called for greater equity (and less loan) capi-tal
while granting assistance from public financial institutions and a steady increase in the
propor-tion of activities of private sector to be developed along co-operative lines.

Objective # 7. Attainment of the Planned Resource Allocation:

Finally, the public sector enterprises are supposed to enable the planners and policy-makers to
achieve better resource allocation, con-sistent with the development strategies of the coun-try.
Public sector enterprises will seek to achieve this objective by promoting the development of
small-scale and cottage industries so as to create employment opportunities, alleviate poverty by
producing mass consumption goods and improve the balance of trade position through import
substitution and export promotion.
The meaning of Corporate Social Responsibility in the 1970s was associated with the excluded social
costs of production and the hidden costs occurred by society as a result of business activities including:
Industrial pollution and toxic waste; Racial and sexual discrimination; Political influence of powerful
corporations; Invasion of employees privacy; Deceptive information in marketing; Product safety;
The price of technology, effects of pesticides, aerosols and nuclear power; Increasing concentration of
wealth and income in fewer hands; Business crime (Nader et al, 1974).

Business Ethics

Business ethics are rules of business conduct, by which the propriety of business activities may
be judged. Ethical principles are dictated by the society and underlie broad social policies. These
principles when known, understood and accepted, determine generally the propriety or
impropriety of business activities. Business ethics also relates to the behavior of manager. It can
be defined as an attempt of ascertaining the responsibilities and ethical obligations of business
professionals. Here the focus is on people, how individuals should conduct themselves in
fulfilling the ethical requirement of business. Carter McNamara has defined: Business ethics is
generally coming to know what is right or wrong in the workplace and doing what is right this
is in regard to effects of products/services and in relationship with stakeholders. Attention to
ethics in the workplace sensitizes mangers and staff to how they should act so that they retain a
strong moral compass, consequently, business ethics can be strong preventive medicine.

Societal level

Concern for poor and down-trodden. No discrimination against any particular section or group.
Concern for clean environment. Preservation of scarce resources for posterity. Contributing to
better quality of life.

Personal policy level.

Not to misuse others for personal ends. Not to indulge in politics to gain power. Not to spoil promotional
chances of others. Not to use office car, stationary and other facilities for personal use. Not to fall prey to
shortcuts and easy money. Promise keeping. No violence, i.e. preventing or not causing physical harm to
others. Mutual help. Respect for persons and property.

Business ethics is, in part, concerned with the behavior of individuals as members of the
company and wider society, but it is also increasingly concerned with the values of business as a
whole and how a company integrates values, such as honesty, trust, integrity respect, and
fairness, into its policies, practices and decision making. This can involve ensuring that
employees abide by the law and are not left in a position in which, in order to achieve one set of
targets (e.g. earnings), they are necessarily encouraged to bend or break the law, it can also
involve going beyond legal requirements and adhering to

Legal Compliance
 No matter how influential or powerful a corporation is, the most fundamental responsibility that
a company has towards society is to obey the law. In most of the world, the basic expectation is
that companies make a profit and stay within the law. But not all companies are law-abiding, just
as they are not always profitable; any definition of responsibility that ignores legal compliance is
inherently flawed. Local, national , and international law sets out the rules by which corporations
play, and, over time, has prescribed what companies can and cannot do with regards to areas
such as employment, environmental protection, corruption, human rights, and product safety.
One only needs to think of pornography, arms sales and narcotics to realize how the law defines
what is legitimate business activity; one need only consider corporate law to appreciate how it
spells out the purpose of the company.

HUMAN RIGHTS

The scope of universal human rights agreements has expanded since the Universal Declaration.
The UNs International Covenant on Economic, Social and Cultural Rights focused on fair
wages, the rights to work and education, to freedom of association and collective bargaining, and
to workplace health and safety. The Covenant on Civil and Political Rights emphasized the rights
to life, to peaceful assembly, freedom from torture and cruel or degrading treatment, freedom
from arbitrary arrest and detention, and ethnic and minority rights. As corporate responsibility
has evolved, some industries, such as apparel, electronics, and retail, have focused more on
economic, social, and cultural rights, while others, such as mining, oil and natural gas, and
logging, have found themselves more involved in issues of civil and political rights.

Workers rights and welfare

Non-government organizations and trade unions cajoled companies into joining collaborative
initiatives to encourage higher standards, and local organizations, such as Coverco in Guatemala
and the ABRINQ Foundation formed by the domestic toy industry in Brazil, emerged to improve
factory monitoring. While there are differences from code to code, typically the most respected
codes today address issues that broadly mirror the concerns of the ILOs Declaration on
Fundamental Principles and Rights at Work about forced labor, freedom of association, child
labor, and discrimination; in practice, however, there is still a marked tendency for issues such as
child labor, or health and safety, to be dealt with more rigorously than freedom of association
and working hours.

Corruption

Corruption materially undermines competition, particularly in high-growth emerging markets,

and inflicts enduring harm on society. Each year over $1 trillion is paid in bribes which result in
approximately $2.6 trillion in overall costs, more than five percent of global GDP. The TII and
ORG-Marg study on ten sectors Corruption in India tells us that a whopping Rs 27 billion are
transacted through petty corruption in ten different sectors of the Indian economy in a year. The
ten sectors studied in this survey are: police, health, power, education, ration, land
administration, judiciary, taxation, railways and telecom.

Corruption is anti-national.
 The Hawala scam showed how the anti-national Kashmiri militants were getting money from
abroad through hawala, the same route through which other sections of the society like politics,
business and bureaucracy were also receiving money. The Tehelka.com expose on 13.3.2001
also dramatically highlighted the extent of corruption in politics and defense deals. From these
experiences, it will be obvious that corruption threatens national security and is anti-national.

2. Corruption is anti-poor.

31% of the food grains and 36% of the sugar meant for the Public Distribution System (PDS),
which is designed to provide food security to the people below the poverty line, gets diverted to
the black market. The Government of India (GOI) spends Rs.15,000 crores every year by way of
subsidy to the PDS. This means that Rs. 5000 crores are not used for giving relief to the poor but
land in the pockets of the corrupt shopkeepers and their Godfathers in politics and bureaucracy.
Rajiv Gandhi once observed that out of every rupee meant for the anti poverty programmes only
15 paise reached the beneficiary. Out of the 85 paise may be 40 paise can be accounted for as
administrative overheads. The leakage of the remaining 45 paise is definitely due to corruption.
Corruption is, therefore, anti-poor.