P UBLI C SECTOR ENTERP RI SES REFORM S PSE’s includes Government companies in the Central and State Sectors These industries covers a wide spectrum of activities in basic and strategic industries like: Steel Heavy Eng. Tourism Coal Chemicals Financial Minerals Fertilizers Trading Petroleum Transp. Marketing
In India, a government-owned corporation is termed as a public sector undertaking (PSU). This term is used to refer to companies in which the government (either the federal Union Government or the many state or territorial governments, or both) own a majority (51 percent or more) of the company equity
WHY THE PSE’S ? Public enterprises help in rapid economic growth It creates the necessary infrastructure for economic development To earn return on investment and generate resources for development To promote redistribution of income and wealth To generate employment opportunities To promote balanced regional development To assist the development of small-scale ind. To earn foreign exchange for the economy
Investment in the PSE,s during plansFive year Investment No.of PSE,sPlan (in crores)Ist plan 29 52nd 81 213rd 953 484rth 3902 855th 6237 1226th 18,225 1867th 42,811 2218th 1,18,492 2379th 2,01,500 2381999 2,73,700 2352002 3,24,614 2402003 3,33,475 240
NEED FOR P UBLI C SECTOR ENTER P R I SES R EFOR M S Lack of Competition Over employment Long Gestation period Over capitalization Inefficient Management Absence of Appropriate pricing policy Social Objectives Lack of Efficient and Trained Staff
HI GHLI GHTS OF PUBLI CENTER PRI SES SUR VEY (2002-2003) Gross turnover of all 240 PSU’s during 2002- 03 has been Rs.544390 crore against Rs.478732 crore during 2001-02 Net profit of all 240 PSU’s during 2002-03 has been Rs. 32141 crore against Rs. 25978 in 2001-02 During 2002-03 profit earning PSU’s earned net profit of Rs. 43085 crore while loss making PSU gave net loss of Rs. 10944 crore. cntnd
PSU earning highest turnover is Indian Oil Corporation with Rs.123628 crore. Second, third & fourth places gone to HPCL, BPCL and ONGC respectively. PSU earning highest net profit is ONGC with Rs. 10529 crore. PSU showing highest deficit is FCI with Rs.1166 crore. Hindustan Fertilizer stand second with Rs.1058 crore deficit during 2002-03
Industries reserved for PSU’s prior to July 19911. Arms and Ammunition and allied items of defence equipment2. Atomic energy3. Iron and Steel4. Heavy casting and forging of steel items5. Heavy plant and machinery required for iron and steel production, for mining for machine tool manufacture and such other industries as may be specified by the Central Government.6. Heavy electrical plant including large hydraulic and steam turbines7. Coal and lignite8. Minerals oils9. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.10. Mining and processing copper, lead, zinc, tin molybdenum and wolfram11. Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order 1953.12. Aircraft13. Air transport14. Rail transport15. Ship building16. Telephones and telephone cables, telegraph and wireless apparatus (excluding radio receiving sets)17. Generation and distribution of electricity
Industries reserved for PSU’s since July 19911. Arms and Ammunition and allied items of defence equipment, defence aircraft and warship2. Atomic Energy3. Coal and Lignite4. Mineral Oils5. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond6. Mining of copper, lead, zinc, tin, molybdenum and wolfram7. Minerals specified in the schedule to Atomic Energy (Control of production and use) Order, 19538. Railway Transport
Industries reserved for PSU’s since December2002• Atomic Energy Minerals specified in schedule to atomic Energy (Control of Production and Use) Order, 1953 Railway Transport Arms and Ammunition
Navratna was the title given originally to nine Public Sector Enterprises (PSEs) identified by the Government of India in 1997 as "public sector companies that have comparative advantages", giving them greater autonomy to compete in the global market so as to "support them in their drive to become global giants"
I DENTI FI CATI ON OF P UBLI C SECTOR ENTER P R I SE AS NI NE GEM S SAIL IOCL VSNL HPCL BPCL ONGC BHEL NTPC IPCL GAIL MTNL
Two of these namely IPCL and VSNL have since been privatized and as on July 2003 there are only 9 NAVRATNA PSEs. The profitability of these 9 ratna was Rs.15508 crore during 2001-02
The number of PSEs having Navratna status has been raised to 16,the most recent addition being Oil India Limited
In addition, the government created another category called Miniratna. Miniratnas can also enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions. In 2002, there were 61 government enterprises that were awarded Miniratna status. However, at present, there are 66 government enterprises that were awarded Miniratna status.
In 2009, the government established the Maharatna status, which raises a companys investment ceiling from Rs. 1,000 crore to Rs. 5,000 crore.The Maharatna firms can now decide on investments of up to 15 per cent of their net worth in a project; the Navaratna companies could invest up to Rs 1,000 crore without explicit government approval.
Criteria The six criteria for eligibility as Maharatna are: Having Navratna status. Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations.
An average annual turnover of more than Rs. 20,000.crore during the last 3 years. Earlier it was Rs 25,000 Crore. An average annual net worth of more than Rs. 10,000 crore during the last 3 years. Earlier it was Rs. 15,000 crore.
An average annual net profit after tax of more than Rs. 2500 crore during the last 3 years. Earlier it was Rs. 5000 crore. Should have significant global presence/international operations.
List of Maharatna Coal India Limited Indian Oil Corporation Limited NTPC Limited Oil and Natural Gas Corporation Limited Steel Authority of India Limited
What is disinvestment? Disinvestment means - A reduction in capital investment or Withdrawal of capital investment from a company is called disinvestment Its totally opposite of investment
About disinvestment Mostly govt do disinvestment on those companies which are running in loss or doesnt run properly Govt doesnt do disinvestment in high profit making co.
Conditions Govt must attain 51% share or stake in pse(public sector enter pries) after disinvestment for pse Govt do disinvestment upto 20% of their capital in one time in pse
DI SI NVESTM ENT P ROGRAM M ES I N P SE’S The disinvestment process, which began in 1991-92 with the sale of minority stake in some public sector undertakings The new policy in this regard is that the government is committed to a strong and effective public sector whose social objectives are met by its commercial functioning The Govt. is committed to devolve full managerial and commercial autonomy to successful, profit making companies operating in a competitive environment
Generally, profit making companies will not be privatized As per the National Common Minimum Programme (NCMP) the Government retain existing ‘Navratna’ Companies in the Public Sector Loss making companies either sold off or closed, after all workers get their legitimate dues and compensation The Government has approved the constitution of a National Investment Fund (NIF) comprising of proceeds from disinvestment of public sector units The Govt. has also given in principle approval for listing of currently unlisted profitable PSEs each with a net worth in excess of Rs.200 crore, through an initial public offer (IPO)
OBJECTI VES OF DI SI NVESTM ENT Modernization and up gradation of PSEs Creation of new assets Generation of Employment Retiring of Public Debt To ensure that disinvestments does not result in alienation of national assets, which through the process of disinvestments, remain where they are cntnd
COMPANIES IN WHICHDISINVESTMENT IS DONE BHEL BPCL CONCOR GAIL HCL SAIL NTPC NMDC VSNL MTNL
Setting up a Disinvestment Proceeds Fund Formulating the guidelines for the disinvestments of natural asset companies Preparing a paper on the feasibility and modalities of setting up of Asset Management company to hold, manage and dispose the residual holding of the government in the companies in which government equity has been disinvested to a strategic partner