PUBLIC SECTOR ENTERPRISES IN INDIA

PUBLIC SECTOR ENTERPRISES IN INDIA (Handout No.8)
 Prior to Independence, there were few ‘Public Sector’ Enterprises in the country. These included the Railways, the Posts and Telegraphs, the Port Trusts, the Ordinance Factories, All India Radio, few enterprises like the Government Salt Factories, Quinine Factories, etc. which were departmentally managed.
 Independent India adopted planned economic development policies and drew up a roadmap for the development of Public Sector as an instrument for self-reliant economic growth. The 1948 Industrial Policy Resolution envisaged development of core sectors through the public enterprises. Public Sector would correct the regional imbalances and create employment.
 Industrial policy of 1991 has seen a sea change with most Central Government industrial controls being liquidated.
 The Central Public Sector Enterprises (CPSEs) were classified into ‘strategic’ and ‘non-strategic’. Strategic CPSEs were identified in the area of (a) Arms & Ammunition and the allied items of defence equipments, Defence air-crafts and warships; (b) 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); and (c) Railway transport.
 All other CPSEs were considered as non-strategic. Further, Industrial licensing by the Central Government has been almost abolished except for a few hazardous and environmentally sensitive industries.
 There were 242 Central Public Sector Enterprises (CPSEs) under the administrative control of various Ministries/ Departments as on 31.3.2008.
 The cumulative investment (paid-up capital plus long terms loans) in all the CPSEs stood at Rs. 4,55,409 crore as on 31.3.2008.
 The largest share in this investment belonged to the service sector (40.40 per cent) followed by electricity (27.95 per cent), manufacturing (22.23 per cent), mining sector (8.83 per cent) and agriculture (0.04 per cent). The remaining 0.55 per cent belonged to CPSEs under construction.
 While ‘investment’ in all the CPSEs grew by 8.31per cent in 2007-08 over 2006-07, “capital employed” in all the CPSEs went up by 15.63 per cent during the same period. A great deal of investment in CPSEs is being made through internal resources rather than through investment from outside.
 The net profit of profit making CPSEs (160) stood at Rs. 91,083 crore in 2007-08.
 The net loss of loss making enterprises (53) on the other hand, stood at Rs. 11,274 crore ; this includes accounting losses of closed units like the Fertilizers Corporation of India (Rs.1,504 crore) and Hindustan Fertilizers Corporation (Rs.1,102 crore).
 The Food Corporation of India (FCI) and Artificial Limbs Manufacturing Corporation of India (ALIMCO) etc. are CPSEs that have been laying greater emphasis on non-financial /social objectives.
 The CPSEs earned foreign exchange amounting to Rs. 74,283 crore during 2007-08. The total foreign exchange outgo (Rs. 3,68,196 crore) clearly exceeded the foreign exchange earnings.
 The total number of employees in all CPSEs came down to 15.35 lakh (excluding casual and contract labour) as on March 31, 2009 compared to 15.66 lakh as on March 31, 2008.
 The average per capita emolumentsin CPSEs stood at about Rs 5,45,500 per annum.
 As many as 44 CPSEs are listed on the stock exchanges of India. Market capitalization of all listed CPSEs as a percentage of market capitalization of BSE was 18.35 per cent as on March 31, 2007.
 The concept of Navratna and Mini-Ratna was introduced with greater delegated authority, both financial and managerial. Government has realized that ‘Navratnas’, ‘Mini-ratnas’ and other CPSEs are required to grow and deliver on the promises they have made to their stakeholders. Other reforms have also been announced, such as professionalisation of the Boards of Directors of public sector enterprises and evaluation of performance of CPSEs through Memorandum of Understanding (MOU).
 In July 1997, the Government had identified 9 Central Public Sector Enterprises as Navratnas. These enterprises had comparative advantage and potential to emerge as global giants. The Navratna PSEs at present are BHEL, BPCL, GAIL, HPCL, IOC, MTNL, NTPC, ONGC and SAIL.
 These PSEs have been given enhanced autonomy and delegation of powers to incur capital expenditure, to enter into technology joint ventures/strategic alliances, to effect organisational restructuring, to create and wind up below Board level posts, to raise capital from domestic and international market, to establish financial joint ventures and to wholly owned subsidiaries, etc.
 In October 1997, the Government had also decided to grant enhanced autonomy and delegation of financial powers to some other profit making companies subject to certain eligibility conditions and guidelines to make them efficient and competitive.
 These companies, called Miniratnas, are in two categories, namely, Category-I and Category-II. The criteria for conferring the Miniratna status are : (i) PSE should be profit making for the last 3 years continuously and should have positive net worth, (ii) it should not have defaulted in repayment of loans/interest payment on loans due to Government, (iii) it should not depend upon budgetary support or Government guarantee (Government guarantee required under the standard stipulations of external donor agencies will not affect the Miniratna status); and (iv) restructuring of the Board of Directors by inducting non-official Directors. PSEs which have made pre-tax profit of Rs. 30 crore or more in at least one of the 3 years are given Category I status while others are given Category II status. The administrative Ministries are empowered to declare a PSE as a Miniratna if it fulfils the eligibility conditions.
 The Government has been delegating enhanced financial and operational powers to the Navratna, Miniratna and other profit-making CPSEs. There are 18 Navratna enterprises. Six more CPSEs, namely the Airport Authority of India Limited, Ennore Port Ltd, Tehri Hydro Development Corporation, Security Printing and Minting Corporation Ltd, Satluj Jal Vidut Nigam Ltd and Indian Railway Catering and Tourism Corporation Ltd. were granted Miniratna status during the year, raising the total number of Miniratna CPSEs to 62.
 The enhanced powers delegated to the Boards of Miniratna PSEs included power to incur capital expenditure, to establish joint ventures and subsidiaries in India, to enter into technology joint ventures/strategic alliances and obtain technology and know-how by purchase or other arrangements. The exercise of these powers is subject to various conditions and guidelines laid down for this purpose including restructuring of the Board of Directors by inducting non-official Directors.
 Besides endeavouring to professionalize the Boards of Directors of these enterprises, the Government has issued guidelines on corporate governance of CPSEs. The Board for Reconstruction of Public Sector Enterprises (BRPSE), established to advise the Government, inter alia, on revival/restructuring of sick and loss-making CPSEs, made recommendations on 58 cases until December 31, 2009. The Government has approved proposals for the revival of 37 CPSEs and closure of two. The total assistance approved in this regard up to March 31, 2009 was Rs 15,275 crore, which comprised Rs 2,935 crore as cash assistance and Rs 12,340 crore as non-cash assistance.
 The following observations are made regarding the performance of CPSEs during the last 10 years:-
 The capital employed has increased from Rs. 2,49,855 Crores in 1997-98 to Rs.6,65,124 Crores in 2006-07 recording a growth of 266%.
 Number of loss incurring CPSEs, it has come down from 100 in 1997-98 to 59 in 2006-07.
 Turnover increased to Rs.9,64,410 Crores in 2006-07, from Rs. 2,76,002 Crores in 1997-98 recording a net worth growth of 349% increased from Rs. 1,34,443 Crores to Rs.4,52,995 Crores in 2006-07 recording a growth of 337%.
 The turnover is equal to Rs.9,64,410 Crores in 2006-07, which is an increase of 349% in comparison to 1997-98 (Rs. 2,76,002 Crores ). As regards Net worth, it has increased by 337% in 2006-07 in comparison to 1997-98 (Rs. 1,34,443 Crores), and is presently at Rs.4,52,995 Crores.
 Net profit has increased by 599% in 2006-07 in comparison to 1997-98 (Rs. 13582 Crores), and is currently to the tune of Rs. 81550 Crores.

Performance of CPSEs during 2007-08 (Rs. in crore)

Particulars 2007-08 2006-07 Change %
Investment (long term loan + equity) 455409 420476 8.3
Capital employed (net fixed assets + working capital ) 763127 659959 15.6
Total turnover 1081925 964896 12.1
Profit of Profit Making CPSEs 91083 89578 1.7
Loss of Loss Making CPSEs 11274 8457 33.3
Net worth 518417 452753 14.5
Dividend declared 28081 26819 4.7
Contribution to Central Exchequer 165994 148789 11.6
Foreign Exchange Earnings 74283 70906 4.8
a) Oil companies 47203 43777 7.8
b) Other companies 27080 27129 0.2
Foreign Exchange Outgo 368196 316161 16.5
a) Oil companies 278992 241736 15.4
b) Other companies 89204 74425 19.9

List of Navratna and Miniratna CPSEs

Navratna CPSEs (as on November, 2009)
1. Bharat Electronics Limited
2. Bharat Heavy Electricals Limited
3. Bharat Petroleum Corporation Limited
4. Coal India Limited
5. GAIL (India) Limited
6. Hindustan Aeronautics Limited
7. Hindustan Petroleum Corporation Limited
8. Indian Oil Corporation Limited
9. Mahanagar Telephone Nigam Limited
10. National Aluminium Company Limited
11. NMDC Limited
12. NTPC Limited
13. Oil & Natural Gas Corporation Limited
14. Power Finance Corporation Limited
15. Power Grid Corporation of India Limited
16. Rural Electrification Corporation Limited
17. Shipping Corporation of India Limited
18. Steel Authority of India Limited

Miniratna Category - I CPSEs

1. Airports Authority of India
2. Balmer Lawrie & Co. Limited
3. Bharat Dynamics Limited
4. BEML Limited
5. Bharat Sanchar Nigam Limited
6. Bongaigaon Refineries & Petrochemicals Limited
7. Central Warehousing Corporation
8. Central Coalfields Limited
9. Chennai Petroleum Corporation Limited
10. Cochin Shipyard Limited
11. Container Corporation of India Limited
12. Dredging Corporation of India Limited
13. Engineers India Limited
14. Ennore Ports Limited
15. Garden Reach Shipbuilders & Engineers Limited
16. Goa Shipyard Limited
17. Hindustan Copper Limited
18. Hindustan Latex Limited
19. Hindustan Newsprint Limited
20. Hindustan Paper Corporation Limited
21. Housing & Urban Development Corporation Limited
22. India Tourism Development Corporation Limited
23. Indian Railway Catering & Tourism Corporation Limited
24. IRCON International Limited
25. Kudremukh Iron Ore Company Limited
26. Mazagaon Docks Limited
27. Mahanadi Coalfields Limited
28. Manganese Ore India Limited
29. Mangalore Refinery & Petrochemicals Limited
30. Mishra Dhatu Nigam Limited
31. MMTC Limited
32. MSTC Limited
33. National Fertilizers Limited
34. Neyveli Lignite Corporation
35. NHPC Limited
36. Northern Coalfields Limited
37. Numaligarh Refinery Limited
38. Oil India Limited
39. Rashtriya Chemicals & Fertilizers Limited
40. Rashtriya Ispat Nigam Limited
41. RITES Limited
42. Satluj Jal Vidyut Nigam Limited
43. Security Printing and Minting Corporation of India Limited
44. South Eastern Coalfields Limited
45. State Trading Corporation of India Limited
46. Tehri Hydro Development Corporation Limited
47. Telecommunications Consultants (India) Limited
48. Western Coalfields Limited

Miniratna Category-II CPSEs

49. Broadcast Engineering Consultants (I) Limited
50. Central Mine Planning & Design Institute Limited
51. Educational Consultants (I) Limited
52. Engineering Projects (I) Limited
53. Ferro Scrap Nigam Limited
54. HMT (International) Limited
55. HSCC (India) Limited
56. India Trade Promotion Organization
57. Indian Medicines Pharmaceuticals Corporation Limited
58. M E C O N Limited
59. National Film Development Corporation Limited
60. P E C Limited
61. Rajasthan Electronics & Instruments Limited
62. Water & Power Consultancy (India) Limited