1) Public sector undertakings (PSUs) are government-owned corporations established to promote economic development, generate financial resources, and create employment opportunities. 2) PSUs are divided into three categories based on autonomy - Maharatna have the most autonomy, followed by Navratna, and then Miniratna. 3) While PSUs helped achieve important social and economic goals, they have also faced issues like poor planning, overstaffing, and inefficiency. This has led the government to pursue policies like disinvestment and privatization to improve performance.

1. PSU’s and DisinvestmentPresented By,Shahane SirDivyaChabra - 07HardikGor - 17 Pratiktiberwal - 53

2. Definition of PSUIn India, public sector undertaking (PSU) is a term used for a government-owned corporation (company in the public sector). The term is used to refer to companies in which the government (either the Union Government or state or territorial governments, or both) owned a majority (51 percent or more) of the company equity.

3. A Public Sector Undertaking is a corporation in the public sector in India, where management control of the company rests with the Government, it can be Central Government or the State GovernmentsGenesisThe main objectives of setting up the Public Sector enterprises as stated in Industrial policyResolution of 1956 were:To promote rapid economic development through creation and expansion of infrastructure

4. To generate financial resources for development

5. To promote redistribution of income and wealthCont… To create employment opportunities

6. To promote balanced regional growth

7. To encourage the development of small-scale and ancillary industries, and

8. To promote exports on the one side and import substitution, on the other.Social ObjectivesEquitable distribution of wealthProvision of essential goods andTakeover of sick unitsPolitical objectivesPublic interest

9. National defence

10. Socialism PSU companies are divided into three categories:MaharatnaNavratnaMiniratna

11. MaharatnaGovt. Conferred MAHARATNA Status on 16th Nov 2010 to 4 PSU’sAllows the PSU’s to raise its Investment Ceiling from `1000 to `5000 cr.Gives the PSU Autonomy to decide on investments up to 15% of their net worth in a projectExamples:Indian Oil CorporationNTPC Ltd.Oil & Natural Gas CorporationSteel Authority of India Ltd.

12. Criteria for Maharatna StatusAccording to the criteria laid down by the Cabinet, the Maharatna status is granted to listed Navaratna central public sector companies with an average annual turnover of more than Rs 25,000 crore, net profit after tax of Rs 5,000 crore and net worth of Rs 15,000 crore during the past three year

13. Navratna statusNavratna status gives a company enhanced financial and operational autonomy and empowers it to invest up to `1000 cr. or 15% of their net worth on a single project without seeking government approvalIn a year, these companies can spend up to 30% of their net worth not exceeding ` 1000 cr. They will also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad.

14. Criteria for Navratna StatusNav ratna status is conferred by Department of Public Enterprises. Net profit to net worthTotal manpower cost to total cost of production or cost of servicesPBDIT to capital employedPBDIT to turnoverEPS Inter-sectoral performance.Additionally, a company must first be a Miniratna and have four independent directors on its board before it can be made a Navratna.

15. Major Example of NavratnaBharat Electronics LimitedBharat Heavy Electricals LimitedBharat Petroleum Corporation LimitedCoal India LimitedGAIL (India) LimitedHindustan Aeronautics LimitedHindustan Petroleum Corporation LimitedMahanagar Telephone Nigam LimitedNational Aluminium Company LimitedNMDC LimitedOil India LimitedPower Finance Corporation LimitedPower Grid Corporation of India LimitedRural Electrification Corporation LimitedShipping Corporation of India Limited

16. Investment of Government in PSU

17. Performance of Public sector(Rs.Crs)

18. Industries reserved for PSU’s since July 1991Arms and Ammunition and allied items of defence equipment, defence aircraft and warshipAtomic EnergyCoal and Lignite Mineral oilMining of iron ore, gold and diamondMining of copper, zinc, led, tin and molybdenum.Minerals specified in the schedule to Atomic Energy (Control of production and use) Order, 1953Railway Transport

19. Top 10 PSU in IndiaIOC-20 largest company in the world, most profitable PSU, ranked in Fortune 500 listsNTPC-India largest power company. contributes to 28.5% of the power to the country.BPCL-3 largest company in India, listed in Fortune 500 listsHPCL-operates the largest lube refinery in IndiaONGC-5 largest company ,contributes 77% of India’s crude oil, 81% of natural gas production

20. Top 10 PSU in India SAIL-6 largest company in India and leading steel producerBHEL-manufactures over 180 products and caters to core sector of indian economyBSNL-Largest telecom industryHAL-Largest public sector in aeronautical engineeringBharat Dynamics Limited has made it to the top ten list due to the sheer grit and diligence that it showcases in its balance sheet and the profitability that it shows year after years

21. Advantages & Disadvantages of PSU’sPoor Project Planning

22. Over-capitalization

23. Excessive Overheads

24. Overstaffing

25. Under-utilisation of Capacity

26. Lack of a Proper Price Policy

27. Inefficient Management CHANGE OF STRATEGYDeregulation of Imports

28. Foreign dept repayment crises

29. Raising of Loans from IMF

30. Reversal of Policies towards PSU’sIndustrial Policy 1991The Industrial policy of 1991 started the process of delicensing and except 18 industries, Industrial licensing was withdrawn. The market was opened up to domestic private capital and foreign capital was provided free entry up to 51% equity in high technology areas. The aim of economic liberalization was to enlarge competition and allowing new firms to enter the market. Thus the emphasis shifted from PSEs to liberalization of economy

31. Meaning and Reasons for PrivatizationPrivatization is a process by which the government transfers the productive activity from the public sector to the private sectorImprovement in efficiency and performanceFixing responsibility is easierResponse time incase of Private sector is lessPrivatization leads to better services to customersRemedial measures are taken early in private sector

32. Evolution of Privatization PolicyInterim budget and budget speech 1991-92Report on Rangarajan committee on disinvestment of sharesDisinvestment Commission RecommendationsBudget Speech 1998-1999Strategic and Non Strategic ClassificationAddress by President to joint session of ParliamentNational Common Minimum Program, 2004

33. Role of Private SectorDominant sector in terms of total share of companies both private and public ltdImportance for development of the countryExtensive modern industrial sectorPotentialities due to personal incentive in small sector