Public Sector Undertakings in India

The government-owned corporations are termed as Public Sector Undertakings (PSUs) in India. In a PSU majority (51% or more) of the paid up share capital is held by central government or by any state government or partly by the central governments and partly by one or more state governments. The Comptroller and Auditor General of India (CAG) audits government companies. In respect of government companies, CAG has the power to appoint the Auditor and to direct the manner in which the Auditor shall audit the company's accounts.
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Comptroller and Auditor General of India (CAG) - External website that opens in a new window Comptroller and Auditor General of India (CAG) - External website that opens in a new window The Companies Act 1956 - External website that opens in a new window

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Evolution of PSUs Classification of PSUs Section 25 Companies Maharatna/Navratna/Miniratna Status for PSUs Role of PSUs Empowerment of PSUs

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Corporate Governance of PSUs Corporate Social Responsibility of PSUs Jobs & Career Governance of PSUs

Evolution of Public Sector Undertakings Post Independence, India was grappling with grave socio-economic problems, such as inequalities in income and low levels of employment, regional imbalances in economic development and lack of trained manpower, weak industrial base, inadequate investments and infrastructure facilities, etc. Hence, the roadmap for Public Sector was developed as an instrument for self-reliant economic growth. The country adopted the planned economic development polices, which envisaged the development of PSUs. Initially, the public sector was confined to core and strategic industries. The second phase witnessed nationalization of industries, takeover of sick units from the private sector, and entry of the public sector into new fields like manufacturing consumer goods, consultancy, contracting and transportation etc. The Industrial Policy Resolution 1948 outlined the importance of the economy and its continuous growth in production and equitable distribution. In this process, the policy envisaged active engagement of the State in development of industries. The Industrial Policy Resolution 1956 classified industries into three categories with respect to the role played by the State y y

The first category (Schedule A) included industries whose future development would be the exclusive responsibility of the State The second (Schedule B) category included Enterprises whose initiatives of development would principally be driven by the State but private participation would also be allowed to supplement the efforts of the State And, the third category included the remaining industries, which were left to the private sector.

In 1969, the government nationalized 14 major banks. The Industrial Licensing Policy 1970 placed certain restrictions on undertakings belonging to large industrial houses, defined on the basis of

assets exceeding Rs 350 mn. In 1973, the definition of large industrial houses was adopted in conformity with that of the Monopolies and Restrictive Trade Practices Act (MRTP) 1969 - External website that opens in a new window and included companies whose assets exceeded Rs 200 mn. The Statement on Industrial Policy in July 1991 was also significant. It brought in fundamental changes in the MRTP Act as well. The statement revised the priority of the public sector.

Classification of Public Sector Undertakings Public Sector Undertakings (PSUs) can be classified as Public Sector Enterprises (PSEs), Central Public Sector Enterprises (CPSEs) and Public Sector Banks (PSBs). The Central Public Sector Enterprises (CPSEs) are also classified into 'strategic' and 'nonstrategic'. Areas of strategic CPSEs are:
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Arms & Ammunition and the allied items of defence equipments, defence air-crafts and warships Atomic Energy (except in the areas related to the operation of nuclear power and applications of radiation and radio-isotopes to agriculture, medicine and non-strategic industries) Railways transport.

All other CPSEs are considered as non-strategic. For detailed information on the classification and categorization of CPSEs, click here - File referring to external site opens in a new window . Schedule-Wise List of Central Public Sector Enterprises - File referring to external site opens in a new window

Section 25 Companies

Public Sector Enterprises having objects to promote commerce, art, science, religion, charity or any other useful purpose and not having any profit motive can be registered as non-profit company under section 25 of the Companies Act, 1956. This section empowers the Central Government to grant a licence directing that such an association may be registered as a company with limited liability, without the addition of the words `Limited' or `Private Limited' to its name. Such companies are also called as the Non-profit or 'No Profit - No Loss' companies.
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List of Section 25 Companies - File referring to external site opens in a new window

Maharatna/Navratna/Miniratna Status for Public Sector Undertakings The status of Maharatna, Navratna, Miniratna to CPSEs is conferred by the Department of Public Enterprises - External website that opens in a new window to various Public Sector Undertakings. These prestigious titles provide them greater autonomy to compete in the global market. Maharatna A company qualifying for the Maharatna - External website that opens in a new window status should have an average annual turnover of Rs 20,000 crore during the last three years against Rs 25,000 crore prescribed earlier. The average annual net worth of the company should be Rs 10,000 crore. The Maharatna status empowers mega CPSEs to expand their operations and emerge as global giants. The coveted status empowers the boards of firms to take investment decisions up to Rs 5,000 crore as against the present Rs 1,000 crore limit without seeking government approval. The Maharatna firms would now be free to decide on investments up to 15% of their net worth in a project, limited to an absolute ceiling of Rs 5,000 crore. Navratna The Central Public Sector Enterprises (CPSEs) fulfilling the following criteria are eligible to be considered for grant of Navaratna - External website that opens in a new window status:
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Having Schedule 'A' and Miniratna Category-1 status.

Having at least three 'Excellent' or 'Very Good' Memorandum of Understanding (MoU) ratings during the last five years.

For detailed information on criteria for Navratna status click here - External website that opens in a new window. The Navratna status empowers PSEs to invest up to Rs. 1000 crore or 15% of their net worth on a single project without seeking government approval. In a year, these companies can spend up to 30% of their net worth not exceeding Rs. 1000 cr. They also enjoy the freedom to enter joint ventures, form alliances and float subsidiaries abroad. Miniratna Category For Miniratna category I status, the CPSE should have made profit in the last three years continuously, the pre-tax profit should have been Rs. 30 crores or more in at least one of the three years and should have a positive net worth. For category II, the CPSE should have made profit for the last three years continuously and should have a positive net worth. Miniratnas can enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions. This designation applies to PSEs that have made profits continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years. Miniratna Category-II CPSEs Category II miniratnas have autonomy to incurring the capital expenditure without government approval up to Rs. 300 crore or up to 50% of their net worth whichever is lower.
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List of Maharatna, Navratna and Miniratna CPSEs - External website that opens in a new window Maharatna/Navratna/Miniratna Status of CPSEs - External website that opens in a new window

Role of Public Sector Undertakings Public Sector Undertakings (PSUs) have laid a strong foundation for the industrial development of the country. The public sector is less concerned with making profits. Hence, they play a key role in nation building activities, which take the economy in the right direction. PSUs provide leverage to the Government (their controlling shareholder) to intervene in the economy directly or indirectly to achieve the desired socioeconomic objectives and maximize long-term goals. As agriculture is the backbone of Indian economy, Public Sector Banks (PSBs) play a crucial role in pushing the agricultural economy on to the

progressive pathway and helping develop rural India. Moreover, PSUs play a substantial role in the rural development by providing basic infrastructural services to citizens.

Empowerment of Public Sector Undertakings The Government provides Public Sector Enterprises (PSEs/PSUs) the necessary flexibility and autonomy to operate effectively in a competitive environment. The Boards of Navratna and Miniratna companies - External website that opens in a new window are entrusted with more powers in order to facilitate further improvement in their performance. The government has also implemented revised salaries for executives of PSEs/PSUs. Moreover, some innovative measures such as Performance Related Pay have been introduced to make them more efficient. These incentives for the employees have been linked to individual, group as well as company performance. For further strengthening, the government is also encouraging the listing of Public Sector Enterprises on the stock markets.
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Latest Pay Revision Guidelines - External website that opens in a new window Wage Policies & Related Matters Feasibility Study for Implementing Performance Related Pay - PDF file that opens in a new window

Corporate Governance of Public Sector Undertakings Good corporate governance practices are essential for sustainable business. It generates long term value to all its shareholders and other stakeholders. The Ministry of Corporate Affairs has been working towards strengthening of the corporate governance. The ministry encourages the use of better practices through voluntary adoption. For this purpose, a set of voluntary guidelines has been drafted. The Corporate Governance Voluntary Guidelines serve as a benchmark for the corporate sector and also help them in achieving the highest standard of corporate governance.
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Corporate Governance Voluntary Guidelines 2009 - File referring to external site opens in a new window

Corporate Social Responsibility of Public Sector Undertakings Social Obligations of Central Public Enterprises PSUs serve the interest of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. The Government has issued the guidelines on Corporate Social Responsibility for Central Public Sector Enterprises (CPSEs) following the Committee on Public Undertakings (1993-94) recommended a number of measures in its 24th Report on 'Social Responsibilities and Public Accountability of Public Undertakings'. Although the Government believes in making PSEs growth oriented and technically dynamic, its policy is to give greater powers to the boards so that PSEs could function professionally. While the focus is on generating surpluses for self-sustaining growth, the PSEs generally undertake certain amount of non-commercial responsibilities, in furtherance of their commercial objectives. All PSEs cannot be treated on an equal footing for undertaking various types of social activities. It is for the individual PSE to identify and implement social responsibilities keeping in view its financial ability to sustain such activities, operating environment and provisions in its MOA/Statute. It is likely that some social responsibilities may be assigned to PSEs through the issuance of Presidential Directives/guidelines by the concerned administrative Ministries/Departments. While implementation of Presidential Directives is mandatory; the guidelines are also generally to be followed except when the boards of directors of PSEs decide not to adopt them for reasons to be recorded in writing. It is desirable that boards of PSEs have full flexibility in identification and implementation of social responsibilities because as per the Articles of Association they enjoy full autonomy in this regard. PSEs are free to avail the help of State Governments, District Administration and peoples' representatives, wherever necessary.
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Guidelines on Corporate Social Responsibility for Central Public Sector Enterprises (CPSEs) - File referring to external site opens in a new window

Jobs & Career

The Public Sector Undertakings (PSUs) have their own recruitment procedures. This sector provides job opportunities to both technical and nontechnical personnel. The Public Enterprises Selection Board - External website that opens in a new window is responsible for selection and placement of personnel in the posts of Chairman, Managing Director or Chairman-cum-Managing Director (Level-I), and Functional Director (Level-II) in PSEs as well as in posts at any other level as may be specified by the Government.
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Query on Public Sector Undertaking Board Structure - External website that opens in a new window Vacancies - External website that opens in a new window Policy & Procedures - External website that opens in a new window Guidelines for Shortlisting of Candidates - External website that opens in a new window Application Form for State Public Sector Executives/Executives from the Private Sector - PDF file that opens in a new window

Governance of Public Sector Undertakings The Department of Public Enterprises - External website that opens in a new window acts as a nodal agency for all Public Sector Enterprises (PSEs). The important roles and tasks of the Department are:
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General policy relating to Public Sector. Matters relating to issue of Presidential Directives and guidelines to Public Sector Enterprises. Formulation of policy guidelines pertaining to Public Sector Enterprises in areas like performance improvement and evaluation, financial management, personnel management, board structures, wage settlement, training, industrial relation, vigilance, performance appraisal, etc. Matters relating to reservation of posts in the public sector enterprises for certain classes of citizens. All matters relating to Memorandum of Understanding between the Public Sector Enterprises and the administrative Ministries/Departments. Matters relating to delegation of powers to Board of Directors. To undertake in depth studies in respect of significant areas of functioning of Central PSEs Matters relating to International Centre for Public Enterprises (ICPE) - External website that opens in a new window

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Matters relating to Standing Conference of Public Enterprises (SCOPE) - External website that opens in a new window To monitor and evaluate the performance of PSEs and to act as a repository of data and to bring out an Annual Survey for the Parliament. Permanent Machinery of Arbitrators for settlement of disputes among public sector enterprises and Government Departments except disputes relating to tax matters. Appraisal of proposal from different administrative Ministries/Deptt. pertaining to restructuring, revival, joint venture etc. o DPE Guidelines - External website that opens in a new window o Office of Chief Controller of Accounts, Min. of Commerce & Industry - External website that opens in a new window o Department of Economic Affairs - External website that opens in a new window o Department of Expenditure - External website that opens in a new window o Standing Conference Of Public Enterprises (SCOPE) - External website that opens in a new window o Other Govt. Departments - External website that opens in a new window 1. National Thermal Power Corporation (NTPC)

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National Thermal Power Corporation Limited (NTPC) is the largest thermal power generating company of India. It was incorporated in the year 1975 with the objective of planning, promoting and organizing an integrated development of thermal power in the country. The total approved investment of the Corporation as on 31.3.2001 stands at Rs. 44957.87 crores. Govt. of India has identified NTPC as one of the Navratnas- a potential Global Giant. NTPC is a schedule A organisation. The approved capacity of NTPC projects is 22,955 MW. The capacity commissioned upto 31st March,2001 is 19,435 MW. NTPC's share on 31st March'2001 in the total installed capacity of the country is 19.3% while it contributed 26% of the total power generation of the country during 2000-2001. Presently, NTPC has to its credit 13 coal based thermal power projects and 7 gas/ liquid fuel based combined cycle project. Besides its own stations, NTPC has made foray into hydro power with take over of Koldam Hydro Power Project (800 MW) from Himachal Pradesh SEB in February,2000. NTPC also manages the Badarpur Thermal Power Station in Delhi (705 MW) and Balco captive power station (270 MW) near Korba, Chattisgarh, which was also constructed by NTPC. For further details, please surf the site at : www.ntpc.co.in
2. National Hydroelectric Power Corporation (NHPC)

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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. For further details, please surf the site at :http://recindia.nic.in , http://www.recindia.com.

4. North Eastern Electric Power Corporation (NEEPCO)

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North Eastern Electric Power Corporation Ltd. (NEEPCO) was constituted in 1976 under the Company's Act 1956 with the objective of developing the large power potential of the North Eastern Region of the country through planned development of the North Eastern Region. Since then NEEPCO has grown into one of the pioneer public sectors with an authorized share capital of Rs. 2500.00 crores. It is schedule B organisation. The North Eastern Region of the country is blessed with highest hydropower potential of the country which is estimated at 48000 MW constituting about 33% of the total reserves of the country. The region has abundant natural gas sources. There is ample scope of development in this under developed region where the main infrastructure has been identified as power. The main objectives of the North Eastern Electric Power Corporation are to add to the power generating capacity in the North Eastern Region by installing hydro and thermal power plants to ensure optimum utilisation of commissioned generation projects, to adequate internal sources by ensuring justifiable return on investment and to continue sustained efforts to obtain the receivable from State Electricity Boards/ Departments, to undertake long term feasibility studies for optimum development of hydro power resources of river basins in North Eastern region. At present, NEEPCO is contributing 625 MW out of a total installed capacity of 1649 MW in North-Eastern Region. For further details, please surf the site at : www.neepco.com
5. Power Finance Corporation (PFC)

The Power Finance Corporation Ltd. (PFC) was incorporated on 10th July, 1986 under the Companies Act, 1956. The mission of PFC is to function as the prime development financial institution dedicated to the growth and overall development of the power sector. The borrower-portfolio of PFC comprises the State Electricity Boards, State Generation Corporations, Municipal run power utilities besides the central and private sector power utilities. The funds provided by the Corporation are in the nature of the additional to Plan Allocation (in respect of SEBs etc.) and based on the merits of the individual projects. As on 30th June, 1999, the Authorized Capital and the paid-

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up (equity) capital of the Corporation stood at Rs. 2000 crores and Rs. 1030 crores respectively. The Power Finance Corporation is a schedule 'A' organization. For further details, please surf the site at : www.pfcindia.com 6. Power Grid Corporation of India (POWER GRID)

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POWER GRID was established in October 23, 1989 with the mandate to "establish and operate Regional and National Power Grids to facilitate transfer of power within and across the Regions with reliability, security and economy on sound commercial principles" as its mission. POWER Grid's persistent efforts to accord the deserved priority to the transmission sector, which has so far eluded this vital sector of India has been recognized and POWER GRID has been statutorily acknowledged as Central National Transmission Utility of the country. During the last 7 years, the company has added around 13,000 ckt. Kms. EHV transmission lines to the national network. Asset base of the company grew from Rs. 3521 crores in 1992-93 to Rs. 8096 crores in 1997-98 and turnover from a modest Rs. 634 crores in 1992-93 to rs. 1434.68 crores in 1997-98. Power Grid operates over 31,000 ckt kms of transmission lines comprising 400 KV, 220 KV, 132 KV AC transmission lines and HVDC transmission system with a total installed transformation capacity of around 28,000 MVA distributed over 55 substations and maintained at a persistent level of over 98% of the availability. For further details, please surf the site at : www.powergridindia.com
From Wikipedia, the free encyclopedia

List of public sector undertakings in India

Jump to: navigation, search The List of Public Sector Undertakings in India details all centrally owned Public Sector Undertakings in India[1][2][3]
State Sector Group Ratna status

S.N Incorpor Company Ministry City o ated Air India Air Ministry Of 1 Transport 2003 Mumbai Civil Aviation Services Ltd. [[Air India Ministry Of 2 1972 Mumbai Civil Aviation Charters]

Maharas Services htra Maharas Services htra

Transport Services Transport Services

S.N Company o Air India Engineering 3 Services Ltd. Airline Allied 4 Services Ltd. Airports Authority 5 Of India Ltd. Akaltara 6 Power Ltd. Andaman & Nicobar Islands Forest and 7 Plantation Developme nt Corporation Andrew Yule & Company Ltd.

Incorpor ated 2006

Ministry

City

State

Sector

Group

Ratna status

Ministry Of Mumbai Civil Aviation

Enterprises Maharas Under Constructi htra on Services Transport Services Miniratn a Category -I

1983

Ministry of Civil Aviation

1996

Ministry of Civil Aviation Ministry of Power Chhattisg arh

Services

Transport Services

2006

1977

Ministry Of Environment & Port Blair Forests

Andaman & Agricultur Agro Based Industries Nicobar e Islands

1979

Ministry Of Heavy Industries & Public Kolkata Enterprises D/o Heavy Industries Dept. Of Space Bangalore Ministry Of Social Justice Kanpur & Empowerment Ministry Of Tourism Ministry Of Petroleum & Natural Gas Ministry Of Petroleum & Natural Gas

West Bengal

Medium & Manufactu Light ring Engineering

Antrix Corporation 1993 Ltd. Artificial Limbs Mfg. 10 1973 Corpn. Of India Assam 11 Ashly Hotel 1985 Corps. Ltd. 9 Calmer 12 Lawrence & 1924 Co. Ltd. Calmer 13 Laurie 2001 Investments

Medium & Karnatak Manufactu Light ring a Engineering Uttar Pradesh Manufactu Consumer ring Goods Tourist Services Ministrat ion Category -I

Assam

Services

Talkative

West Bengal West Bengal

Medium & Manufactu Light ring Engineering Services Financial Services

Folktale

S.N Incorpor Company o ated Ltd. BBQ Constructio 14 1984 n Company Ltd. BEL Optoelectro 15 1990 nic Devices Ltd. 16 BEMUSE 1964

Ministry Ministry Of Heavy Industries & Public Enterprises D/o Heavy Industries Ministry Of Defended D/o Deference Production Ministry Of Defence D/o Defence Production Ministry Of Chemicals & Fertilizers D/o Pharmaceutical s Ministry Of Heavy Industries & Public Enterprises D/o Heavy Industries Ministry Of Coal

City

State

Sector

Group

Ratna status

Folktale

West Bengal

Services

Contract & Construction Services

Tune

Medium & Maharas Manufactu Light ring htra Engineering

Miniratn Karnatak Manufactu Transportation a Bangalore Category ring Equipment a -I West Bengal Chemicals & Manufactu Pharmaceutica ring ls

Bengal Chemicals 17 & 1981 Pharmaceuti cals Ltd. Bharat Bhari 18 1986 Udyog Nigam Ltd. Bharat 19 Coking Coal Ltd. Bharat 20 Dynamics Ltd.

Kolkata

Kolkata

West Bengal

Manufactu Heavy ring Engineering

1972

Dhanbad

Jharkhan Mining d

Coal & Lignite Miniratn a Category -I Navratna

1970

Bharat 21 Electronics 1954 Ltd.

Bharat Heavy 22 Electricals Ltd.

1964

Ministry Of Defence D/o Andhra Hyderabad Defence Pradesh Production Ministry Of Defence D/o Karnatak Bangalore a Defence Production Ministry Of Heavy Industries & Public Enterprises D/o Heavy Industries

Medium & Manufactu Light ring Engineering Medium & Manufactu Light ring Engineering

Manufactu Heavy ring Engineering

Navratna

S.N Incorpor Company o ated Bharat Heavy Plate 23 1966 & Vessels Ltd. Bharat Immunologi cals & Biologicals Corp. Ltd. Bharat Petro Resources JPDA Ltd. Bharat Petro Resources Ltd. Bharat Petroleum Corpn. Ltd.

Ministry Ministry Of Heavy Industries & Public Enterprises D/o Heavy Industries Ministry Of Science & Technology D/o Biotechnology Ministry Of Petroleum & Natural Gas Ministry Of Petroleum & Natural Gas

City

State

Sector

Group

Ratna status

Visakhapat Andhra nam Pradesh

Manufactu Heavy ring Engineering

24

1989

Bulandshah Uttar r Pradesh

Chemicals & Manufactu Pharmaceutica ring ls

25

2006

Mumbai

26

2006

Mumbai

Enterprises Maharas Under htra Constructi on Enterprises Maharas Under htra Constructi on Petroleum Maharas Manufactu (refinery & htra ring Marketing) Navratna

27

1976

Bharat Pumps & 28 1970 Compressor s Ltd. Bharat 29 Refractories 1974 Ltd.

Ministry Of Petroleum & Mumbai Natural Gas Ministry Of Heavy Industries & Public Allahabad Enterprises D/o Heavy Industries Ministry Of Steel Ministry Of Communicatio ns & Information Technology D/o Telecommunic ations Ministry Of Railways Dept. Of Patna Chennai

Uttar Pradesh

Medium & Manufactu Light ring Engineering

Mining

Other Minerals & Metals

Bharat 30 Sanchar 2000 Nigam Ltd.

Services

Miniratn Telecommunic a ation Services Category -I

Bharat Wagon & 31 Engg. Co. Ltd. 32 Bharatiya

1978 2003

Bihar

Manufactu Heavy ring Engineering

Tamilnad Enterprises

S.N Incorpor Company Ministry o ated Nabhikiya Atomic Energy Vidyut Nigam Ltd. Bhartiya Ministry Of 33 Rail Bijlee 2007 Power Co. Ltd. Ministry Of Biecco 34 1919 Petroleum & Lawrie Natural Gas Ministry Of Bihar Drugs Chemicals & & Organic 35 1994 Fertilizers D/o Chemicals Pharmaceutical Ltd. s Birds Jute Ministry Of 36 & Export 1987 Textiles Ltd. Bokaro Kodarma Maithon Ministry Of 37 2007 Transmissio Power n Company Ltd. Brahmaputr Ministry Of a Crackers 38 2006 Petroleum & & Polymers Natural Gas Ltd. Brahmaputr Ministry Of a Valley Chemicals & 39 2002 Fertilizer Fertilizers D/o Corpn. Ltd. Fertilizer Ministry Of Heavy Industries & Braithwaite 40 1976 Public & Co. Ltd. Enterprises D/o Heavy Industries Ministry Of Heavy Bridge & Industries & Roof 41 1972 Public Co.(india) Enterprises D/o Ltd. Heavy Industries 42 British 1981 Ministry Of

City u

State

Sector Under Constructi on

Group

Ratna status

New Delhi West Bengal

Kolkata

Enterprises Under Construction Medium & Manufactu Light ring Engineering Enterprises Under Construction Manufactu Textiles ring

Bihar

Kolkata

West Bengal

New Delhi

Enterprises Under Construction

Lepetkata

Assam

Enterprises Under Construction Manufactu Fertilizers ring

Dibrugarh Assam

Kolkata

West Bengal

Manufactu Heavy ring Engineering

Kolkata

West Bengal

Services

Contract & Construction Services

Miniratn a Category -I

Kanpur

Uttar

Manufactu Textiles

S.N Incorpor Company Ministry o ated India Textiles Corporation Ltd. Broadcast Engg. 43 1995 Consultants India Ltd. Ministry Of Information & Broadcasting

City

State Pradesh

Sector ring

Group

Ratna status

Services

Industrial Development & Tech. Consultancy Services

Miniratn a Category - II

Burn Standard 44 Company Ltd.

1976

Cement 45 Corporation 1965 of India

Ministry Of Heavy Industries & Public Kolkata Enterprises D/o Heavy Industries Ministry Of Heavy Industries & Public Enterprises D/o Heavy Industries Ministry Of Coal

West Bengal

Manufactu Heavy ring Engineering

Manufactu Consumer ring Goods

Central 46 Coalfields Limited Central Cottage 47 Industries Corpn. Of India Ltd.

1975

Jharkhan Mining d

Miniratn a Coal & Lignite Category -I Trading & Marketing

1976

Ministry Of Textiles Ministry Of Science & Technology D/o Scientific & Industrial Research Ministry Of Shipping

Services

Central 48 Electronics 1974 Limited Central Inland 49 Water 1967 Transport Corpn. Ltd. Central Mine 50 1975 Planning & Design

Uttar Pradesh

Medium & Manufactu Light ring Engineering

Kolkata

West Bengal

Manufactu Transportation ring Equipment Industrial Development & Tech. Consultancy Miniratn a Category - II

Ministry Of Coal

Jharkhan Services d

S.N Incorpor Company o ated Institute Ltd.

Ministry

City

State

Sector

Group Services

Ratna status

Public Sector Undertakings : State Trading Corporation of India Limited (STC)

STC was set up on 18th May, 1956, primarily with a view to undertake trade with East European Countries and to supplement the efforts of private trade and industry in developing exports from the country. STC has played an important role in countrys economy by arranging imports of essential items of mass consumption (such as wheat, pulses, sugar, etc.) into India and developing exports of a large number of items from India. The core strength of STC lies in handling exports/ imports of bulk agro commodities. During past 4-5 years, STC has diversified into exports of steel raw materials, gold jewellery and imports of bullion, hydrocarbons, minerals, metals, fertilizers, petro-chemicals, etc. Achieving record breaking performances year-after-year, STC is today able to structure and execute trade deals of any magnitude, as per the specific requirement of its customers. Address : Jawahar Vaypar Bhawan Tolstoy Marg, NEW DELHI-110001. Telephone : (91)11-23313177, (91)11-23701100 Fax : (91)11-23701123, 23701191 e-mail : co.stc@nic.in Web Site : http://www.stc.gov.in

STCL Ltd. is a subsidiary of STC. It was initially established in 1982 as Cardamom Trading Corporation
Ltd., a Government of India undertaking under the Ministry of Commerce & Industry. The company developed from a solely cardamom trading corporation to become Spices Trading Corporation Ltd., in 1987. With globalization and opening of trade world over, Spices Trading Corporation Ltd. was renamed as STCL Ltd. STCL became a wholly owned subsidiary of the State Trading Corporation of India Ltd. in 1999. STCL is involved in import, export and domestic trading of a varied range of products, both agricultural as well as non-agricultural. STCL, headed by a Chairman, is headquartered in Bangalore. Address : 166/2, 13th Main Road, Vasanthnagar, BANGALORE-560052 Telephone : (91)80-22286925,22286926,22260409,22381376 Fax : (91)80-22285086. e-mail : stcl@bgl.vsnl.net.in Website : http://www.stcl.india.com

MMTC Limited
The MMTC Limited (Minerals and Metals Trading Corporation) was created in 1963 as an individual entity on separation from State Trading Corporation of India Ltd. primarily to deal in exports of minerals and ores and imports of non-ferrous metals. In 1970, MMTC took over imports of fertilizer raw materials and finished fertilizers. Over the years import and exports of various other items like steel, diamonds, bullion,

etc. were progressively added to the portfolio of the company. Keeping pace with the national economic development, MMTC over the years has grown to become the largest trading organization in India. Address : Core 1, Scope Complex, 7, Institutional Area, Lodhi Road,, NEW DELHI-110003. Telephone : (91)11- 4362200, Fax : (91)11-4362224. Website : http://www.mmtclimited.org

PEC Limited
The PEC Ltd (Project and Equipment Corporation of India) was carved out of the STC in 1971-72 to take over the canalized business of STCs railway equipment division, to diversify into turn-key projects especially outside India and to aid & assist in promotion of exports of Indian engineering equipment. With effect from 23rd May, 1990, PEC became a subsidiary of the then newly formed Holding Company, Bharat Business International Ltd. Thereafter, from 27th March, 1991, PEC became an independent company directly owned by Government of India. The main functions of PEC Ltd. includes export of projects, engineering equipment and manufactured goods, defence equipment & stores; import of industrial raw materials, bullion and agro commodities; consolidation of existing lines of business and simultaneously developing new products and new markets; diversification in export of non-engineering items eg. Coal & coke, iron ore, edible oils, steel scraps, etc.; and structuring counter trade/ special trading arrangements for further exports. Address : 'Hansalaya', 15, Barakhamba Road, New Delhi - 110001 Telephone : (91) 11-3316372, 3314426 Fax : (91)-11-3314797, 3313804 Website : http://www.peclimited.com

Export Credit Guarantee Corporation of India Limited (ECGC)

The Corporation was established in 1957 as the Export Risk Insurance Corporation of India Ltd. Keeping in view the wider role played by the Corporation, the name was changed to Export Credit Guarantee Corporation of India Ltd. (ECGC). The ECGC is the premier organization in the country, which offers credit risk insurance cover to exporters, banks, etc. The primary objective of the Corporation is to promote the countrys exports by covering the risk of export on credit. It provides (a) a range of insurance covers to Indian exporters against the risk of non-realization of export proceeds due to commercial or political causes and (b) different types of guarantees to banks and other financial institutions to enable them to extend credit facilities to exporters on liberal basis. Address : Express Tower, 10thFloor, P.B.No. 373,Nariman Point ,MUMBAI-400021. Telephone : (91)22-2022587, (91)22-2024852. Fax : (91)22-2045253, (91)22-2023267. Website : http://www.ecgcindia.com

India Trade Promotion Organization (ITPO)

India Trade Promotion Organization has been formed by merging erstwhile Trade Development Authority (TDA) with Trade Fair Authority of India (TFAI) with effect from 1st January, 1992. India Trade Promotion Organization is the premier trade promotion agency of India and provides a broad spectrum of services to trade and industry so as to promote Indias exports. These services include organization of trade fairs and exhibitions in India and abroad, Buyer-Seller Meets, Contact Promotion Programmes apart from information dissemination on products and markets. Address : Pragati Bhawan, Pragati Maidan, NEW DELHI-110001. Telephone : (91)11- 23371491 Fax : (91)11-23371492, 23371493 Web site : http://www.indiatradefair.com

Export Promotion Councils (EPCs)

Presently, there are fourteen Export Promotion Councils under the administrative control of the Department of Commerce. Names and addresses of these Councils are given in Annexure 1.2. These Councils are registered as non-profit organizations under the Companies Act/ Societies Registration Act. The Councils perform both advisory and executive functions. The role and functions of these Councils are guided by the Foreign Trade Policy, 2009-14. These Councils are also the registering authorities for exporters under the Foreign Trade Policy 2009-14.

Overview of Indian Public Sector Central and state Public Sector Undertakings (PSUs) play a prominent role in Indias industrialization and economic development. Since independence, various socio-economic problems needed to be dealt with in a planned and systematic manner. A predominantly agrarian economy, a weak industrial base, low savings, inadequate investments and lack of industrial facilities called for state intervention to use the public sector as an instrument to steer the countrys underlying potential towards self reliant economic growth. The macroeconomic objectives of Central PSUs have been derived from the Industrial Policy Resolutions and the Five Year Plans. State-level public sectors enterprises (state PSUs) were established because of the rising need for public utilities in the states. These PSUs operated in public utilities such as railways, post and telegraph ports, airports and power and contributed significantly towards infrastructure development in India. Since its inception during the First Five Year Plan, many public sector undertakings performed exceptionally well in wealth creation for the country. Many Central PSUs, particularly the Maharatnas, are already global players matching the best global firms in their field of operations. One of the important reasons for the excellent performances of Central PSUs during the recent years was the empowerment of the boards of such profit making Central PSUs by the Government leading to greater autonomy. Consequently, such PSUs have been able to effectively use this autonomy to enhance their performance and operate on commercial lines. Evolution of Public Sector Enterprises in India

Public sector enterprises in India have grown from only five enterprises post independence and with an investment of ` 0.3 bn in the year 1951 to 249 enterprises as on Mar 31, 2010. Aggregate investment in Central PSUs has been increasing over the years. Total investment, including equity plus long-term loans of Central PSUs went up from ` 5,135.32 bn in FY09 to ` 5799.20 bn in FY10, growing 12.93%. As on Mar 31, 2010, there were 94 mega projects costing ` 10 bn and above and 44 major projects costing between ` 1 bn and ` 10 bn. Overall profit of all Central PSUs stood at ` 925.93 bn during FY10 and dividend declared by such Central PSUs stood at ` 332.23 bn. The CPSEs earned foreign exchange equal ` 777.45 bn during the year compared with ` 742.06 bn in FY09. The evolution of PSUs can be divided into three distinguished phases: 1) The pre-independence era; 2) The post-independence era; and 3) The post-liberalization period. The fourth period could perhaps be the one following the recent global economic crisis. During the pre-independence era there were few public enterprises, namely the railways, the posts and telegraph, the port trust, All India Radio and the ordinance factories, among few other government managed enterprises. During the post independence era, the Industrial Policy Resolution 1956 was implemented. Moreover, several strategies specific to the public sector were defined in policy statements in 1973, 1977, 1980 and 1991. The post liberalization era which commenced from 1991 saw the Government introducing the concept of Maharatna, Navratna and Miniratna to accord greater financial and managerial autonomy with the aim of incurring higher capital expenditure apart from forming JVs within the country as well as outside. The period following the recent global economic downturn was one of Government infusing capital into the economy. In order to boost sectors such as real estate, agriculture and small enterprises, GoI, through public sector banks, provided capital at lower interest rates. These initiatives of the Government helped contain serious after effects of the economic meltdown while keeping a tab on inflation.

Role of PSUs in the Indian Economy PSUs contributed significantly to the countrys economy. As on Apr 30, 2011, of the total 247 Central PSUs and their subsidiaries only 50 were listed; of these, 47 that were listed at the Bombay Stock Exchange (BSE) constituted 22% of the total market capitalisation of 4,946 companies listed on the BSE. Additionally, 28 Public Sector Banks (PSBs) including their subsidiaries and six State Level Public Enterprises (SLPEs), accounted for 6% of the total market capitalisation at BSE. The market capitalization of all PSUs taken together was ` 19.84 trn, constituting 28.7% of the total market capitalisation at the BSE. Of these, the share of Central PSUs share in the BSE market capitalization was 22.37% and amounted to ` 15.45 trn as

on Apr 30, 2011. The share of PSBs was 6.28%, amounting to ` 4.34 trn and share of SLPEs in the BSE market capitalisation was less than 1%. The growth and performance of Central PSUs runs parallel with the growth of the Indian economy. In fact, thePSUs have the potential for an even dominant role to play on the back of several yet-to-be listed profitable Central PSUs that can go to the market. As per data from the BSE as on Dec 15, 2010 there were 98 unlisted Central PSUs that made profit for the past three years, clearly indicating the importance of Central PSUs in the growth of the Indian economy. The Central PSU with the highest market capitalization is Oil and Natural Gas Corporation Ltd (ONGC) at ` 2,642.8 bn on the BSE as on Apr 30, 2011. Central PSUs in employment generation The total number of employees in Central PSUs was 1.53 mn in FY09 and came down to 1.49 mn in FY10. While the number of people employed by Central PSUs came down by 2.7% in FY10, the average annual per capita emoluments given went up to ` 609,816 in FY10 up from ` 541,716 in FY09. Moreover, several Central PSUs face high attrition with employees looking out for higher salaries elsewhere. Contribution of PSUs to the Central Exchequer Apart from fulfilling their social commitments, public sector enterprises are contributing significantly to the central exchequer through direct taxes and dividend. The Central Exchequer obtains revenue from PSUs through two modes namely investments in the companies and through taxes and duties paid. The government earns investment revenue from PSUs in the form of dividend and interests and levies taxes on income, custom duties, corporate tax, excise duties and many more. The public sector has been the backbone of the Indian economy. It has acted as a strategic partner in the nations economic growth and in our development process. There was significant decline in the total contribution of Central PSUs to the Central Exchequer during FY10, which came down from ` 1,515.43 bn in FY09 to ` 1,398.30 bn in FY10. This was primarily due to reduction in contribution towards customs duty and excise duty that came down from ` 87.05 bn and ` 632.62 bn in FY09 to ` 69.03 bn and ` 526.42 bn in FY10. This was owing to decline in excise duty rates across several sectors. Moreover, during FY10, net profit of profit making Central PSUs stood at ` 1084.35 bn compared with ` 984.88 bn in the previous year. There was decline in other duties and taxes during the year compared with the previous year. There was however an increase in contribution from corporate tax, dividend payment and dividend tax. The central PSUs have always been supportive to the government in terms of helping them manage its financials and cash flows. In this perspective, the Ministry of Finance issued directives to select Central PSUs asking them to declare special dividend during FY11. The government intends to use additional revenue generated from this dividend to meet additional expenses, including the rising subsidy burden. Net Value addition by Central PSUs In FY10, the share of profit before tax and enterprise profit (PBTEP) was the highest at 35.41% followed by salaries and wages at 25.92%, indirect taxes and duties at 23.70% and interests at 10.19%. A comparison between the shares of the respective items during FY09 and FY10 show very little change during these two years. Moreover, the share of gross value addition of Central PSUs in GDP at market prices stood at 6.30% in FY10 as against 6.20% in FY09. Evolution of the Disinvestment Policy The salient features of the new disinvestment policy include the following:

y y y

Citizens have every right to own part of the shares of Public Sector Undertakings. PSUs are the wealth of the nation and this wealth should rest in the hands of the people. At least 51% of the shareholding and management control should rest with the Government.

Objectives of Disinvestment Disinvestment was seen by the government as a means to raise funds for meeting certain general and specific needs. The governments disinvestment policy was identified as an active tool to reduce the burden of financing the PSUs. Following were the main objectives of disinvestment:

y y y y y y

Improving public finances Reducing financial burden on the government Funding expansion plans Expanding share of ownership Initiating competition Remove politics from non-essential services

Importance of Disinvestment Given an increasingly competitive environment on the back of private enterprises gaining ground on several parameters, disinvestment of PSUs assumes significance. Increased competition from private players makes it difficult for many PSUs to operate profitability. As a result of a rapid erosion of the value of the public assets, it becomes extremely important that the Government disinvests Central PSUs early in order to realize a high value. At present the government has a significant stake locked up in Central PSUs of ` 2 trn. Disinvestments of several leading Central PSUs have raised noteworthy funds through this route. In fact, ONGCs public offer through the Further Public Offer (FPO) route during 2003-2004 has been the largest for any Central PSU, XVII raising ` 105.42 bn. With respect to raising funds through the Initial Public Offering (IPO) by any Central PSU, Coal India Ltd raised ` 151.99 mn through its IPO in 2010-2011 making it the biggest Central PSU IPO until date. The primary purpose of the governments disinvestment initiative is to utilize the funds that become available post disinvestment, for several purposes. The important among them are:

y y y y y

Financing the increasing fiscal deficit Financing large-scale infrastructure development Encouraging spending Retiring government debt, since almost 40-45% of the Central Governments revenue goes towards repaying public debt/interest Spending on social programs such as health and education

Approaches to Disinvestment The following action plan was approved by the government for disinvestment in profit making government companies.

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Already listed profitable CPSEs (not meeting mandatory shareholding of 10%) are to be made compliant by Offer for Sale by Government or by the CPSEs through issue of fresh shares or a combination of both. Unlisted CPSEs with no accumulated losses and having earned net profit in the three preceding consecutive years are to be listed, Follow-on public offers would be considered on a case-by-case basis, based on the need for capital investment of CPSE, and Government would simultaneously or independently offer a portion of its equity shareholding. In all cases of disinvestment, the government would retain at least 51% equity and the management control. All cases of disinvestment are to be decided on a case-by-case basis. The Department of Disinvestment is to identify CPSEs in consultation with respective administrative ministries and submit proposal to Government in cases requiring Offer for Sale of Government equity. A Historical Perspective to Disinvestment

The public sector was envisaged to be the engine of growth for development envisaged by the country. However, this growth was marred when the public sectors shortcomings started manifesting in a way that led to lower capacity utilization, low efficiency, cost overruns, lack of innovativeness, and delay in taking strategic decisions. As a result disinvestment gained credence. The period since the first disinvestment that happened in 1991-1992 to the current period, disinvestment has undergone a sea change both in approach and the policy changes implemented to make the process more functional.

1991-1992 to 2000-2001: During this period 31 PSUs were divested for ` 30.38 bn. The Department of Disinvestment was set up as a separate department in Dec 1999 that was later renamed as Ministry of Disinvestment from Sept 2001. The Government raised ` 200.78 bn during this period against an aggregate target of ` 543 bn, less than half. During this period disinvestments that took place were mostly by way of sale of minority stake in the PSUs. Unit Trust of India picked up minority stakes in several companies that were divested. 2001-2002 to 2003-2004: This period saw the maximum number of disinvestments taking place either by way of strategic sales or through a public offer. The Government raised ` 211.63 compared with an aggregate target of ` 385 bn. 2004-2005 to 2008-2009: During this time, disinvestment almost stagnated owing to it remaining a contentious issue. Total amount raised from disinvestments during this period was only ` 85.15 bn. 2009-2010 to present: On the back of improved market conditions backed by a stable Government a renewed thrust on disinvestment is visible. Government commenced selling minority stakes in both listed and unlisted PSUs through public offers and until Dec 31, 2010 it was able to raise ` 463.15 bn.

Amounts Raised Through Public Offers Central PSUs have shown their mettle on the stock exchanges. As discussed earlier in this report, these listed companies can boast of around 22% of the total market capitalisation of listed companies of BSE. The performance of CPSEs on the stock exchanges is even more credible as listed Central PSUs constitute only about one percent of the total number of companies listed on the BSE. With the biggest ever IPO launched by Coal India Ltd (CIL), PSUs have once again become centre stage with CILs IPO being oversubscribed 15 times. The CIL IPO has reaffirmed investor confidence in public sector enterprises that had waned during the mid 2000s. In fact, the government intends to reap benefits from the credibility and recognition that these enterprises hold in the Indian markets as well as overseas. Robust public sector enterprises have made investments overseas on their own, besides expanding operations and succeeded in meeting global challenges of competition, advancing technologies and free markets. Several Central PSUs have established subsidiaries and alliances abroad. PSBs in tandem with public sector enterprises have performed reasonably well in an increasingly competitive and uncertain environment. Compared with banks globally, Indian PSBs have stood their ground and done well to weather the global economic crisis of 2008 that caught people unaware.

Disinvestment by Central PSUs in the past In the past, Central PSUs made substantial disinvestments in several ways. These include strategic sale to private entities, raising funds through public offers (excluding raising fresh capital), sale of one Central PSU to another Central PSU, apart from auction to financial investors and sale to employees.

Strategic sale of Central PSUs witnessed renewed activity post 2008-2009. Historically, majority of disinvestments have been typically made to strategic partners including sale to private entity or to another Central PSU.

Challenges and Concerns The integration of the Indian economy with global markets resulted in several challenges and concerns. These challenges act as impediments in the growth of public sector enterprises and come in the way of competing space with other private entities. Since their inception, public enterprises have been bereft of proper autonomy and authority to make investments and acquisitions whether in India or overseas. Few of the major challenges and concerns facing these public sector enterprises especially Central PSUs have been discussed below:

Multiple Principles: Most Central PSUs these days are being plagued by multiple principles and multiple goals often resulting in conflicting situations for these enterprises. The outcome of these conflicting principles and goals lead to the public sector enterprises being unable to ascertain the outcome. Conflicting goals often result in affecting overall performance of the organization. Broad based decision making structures: More often than not, the decision making structures in Central PSUs are broad based, resulting in people working at cross purposes owing to lack of proper coordination and a common objective. The principle of profit maximization takes a backseat while vested interests seem to take over. Problem of untapped talent: PSUs were established with the purpose of absorbing surplus labour while reducing unemployment rates in the country. However, owing to stringent recruitment practices that are filled with old-school thoughts and political interventions, these enterprises lost their sheen compared with their private counterparts who despite lacking size and might of such enterprises, end up in moving ahead in recruiting the countrys best minds. Moreover, lack of transparency in the entire recruitment process stops students from top educational institutes from applying for these government posts. Private sectors steer ahead in terms of compensation structure: On the back of economic liberalization and movement of compensation structures from socialist regimes, the differentials between the public sector and their corporate counterparts is widening. If

this disparity is not controlled, the private sector will continue to draw all the talent and public sector enterprise would be left high and dry. Despite the sixth pay commission being implemented, there is still not enough parity between the compensation structures prevalent in the public sector and their private sector counterparts. Inadequate implementation of quantitative performance metrics: Performance measurement of the past years, such as linking financial parameters with operational efficiency led to deterioration of liability. As a result, public sector enterprises find it difficult to compete with private sector companies, whose processes are better aligned. Owing to this, the opportunities available to this sector have become constricted. Lack of autonomy in decision making: Public sector enterprises have always suffered due to lack of autonomy. Initially, delegation of powers was restricted. Consequently, when the Indian economy opened up in the early nineties, such companies were caught off-guard and lost out on several opportunities of expansion both within the country as well as overseas. The need of the hour was to divest more by granting more financial and operational autonomy to the top management in decision making. Creating Maharatnas and Navratnas was one such step towards creating greater autonomy.

Conclusion The public sector is an integral part of the Indian economy and a key growth driver. With the advent of globalization, the public sector gained credence in the face of faced new challenges in developed economies. This sector provided the required thrust to the economy and developed and nurtured human resources, the vital ingredient for the success of any enterprise. The optimistic nature of the operations of Central PSUs can be fathomed from the fact that the gross block in top ten enterprises amounted to ` 7,799.60 bn as on Mar 31, 2010. This was equal to 69% of the total gross block in all Central PSUs. Oil & Natural Gas Corporation Ltd, Bharat Sanchar Nigam Ltd and NTPC Ltd are the top three Central PSUs among the top ten Central PSUs in terms of gross block during the year FY10. The share of these three Central PSUs alone was 39% of the total gross block of all the Central PSUs as on the above period. Over the last few years, public sector enterprises have gained tremendous credibility and recognition not just domestically but also in the international markets and the government is now gearing up to cash in on this.