P UBLI C SECTOR

ENTERP RI SES REFORM S

PSEs 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 PSES ?

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 plans

Five year
Investment
No.of PSE,s
Plan
(in crores)

Ist plan
2nd
3rd
4rth
5th
6th
7th
8th
9th
1999
2002
2003

29
81
953
3902
6237
18,225
42,811
1,18,492
2,01,500
2,73,700
3,24,614
3,33,475

5
21
48
85
122
186
221
237
238
235
240
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 C

ENTER PRI SES SUR VEY (2002-2003)

Gross turnover of all 240 PSUs during 200203 has been Rs.544390 crore against
Rs.478732 crore during 2001-02
Net profit of all 240 PSUs during 2002-03 has
been Rs. 32141 crore against Rs. 25978 in
2001-02
During 2002-03 profit earning PSUs 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 PSUs prior to July 1991

1.
2.
3.
4.
5.

Arms and Ammunition and allied items of defence equipment

Atomic energy
Iron and Steel
Heavy casting and forging of steel items
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 turbines
7. Coal and lignite
8. Minerals oils
9. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.
10. Mining and processing copper, lead, zinc, tin molybdenum and wolfram
11. Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use)
Order 1953.
12. Aircraft
13. Air transport
14. Rail transport
15. Ship building
16. Telephones and telephone cables, telegraph and wireless apparatus (excluding radio
receiving sets)
17. Generation and distribution of electricity

Industries reserved for PSUs since July 1991

1. Arms and Ammunition and allied items of defence equipment,
defence aircraft and warship
2. Atomic Energy
3. Coal and Lignite
4. Mineral Oils
5. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur,
gold and diamond
6. Mining of copper, lead, zinc, tin, molybdenum and wolfram
7. Minerals specified in the schedule to Atomic Energy (Control of
production and use) Order, 1953
8. Railway Transport

Industries reserved for PSUs since December

2002

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
VSNL
BPCL
BHEL
IPCL
MTNL

IOCL
HPCL
ONGC
NTPC
GAIL

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
company's 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 doesn't run properly
Govt doesn't 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 SES

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 WHICH
DISINVESTMENT 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