What are PSUs?

  • Post On: Sunday 21 April 2019 - 15:38.
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PSU(Public Sector Undertakings) also often known by the term Public Sector Enterprises are government-owned corporations or state-owned

PSU(Public Sector Undertakings) also often known by the term Public Sector Enterprises are government-owned corporations or state-owned enterprises created by the government to undertake commercial activities on behalf of the government. The majority of the company’s stocks or more than 51% of shares are owned by the government. This sector is also classified as public sector banks (PSBs) or State Level Public Enterprises (SLPEs) Central Public Sector Enterprises (CPSEs). PSUs provide a secure future and good money as these are less affected by the current recession.

 

 

Two different classifications of public sector undertakings are as follows:

    • The one which Central Government controls is The Central Public Sector Enterprises (CPSEs).
    • And the one which is under State Governments control is State Level Public Enterprises (SLPEs).

PSUs provide a career for both technical and non-technical personnel. There are a total of 252 PSUs in all over India. Each company has its own recruiting procedures, some have competitive type examinations and some have technical written and interview rounds. Thousands of diploma and degree holding personnel in the technical field are recruit in PSUs. Students who are from technical background can apply in technical service providing companies such as BHEL, BPCL, BSNL, HPCL, IOCL, ONGC, MTNL, NHAI, NTPC, SAIL and many more.

There are 8 Maharatnas, 16 Navratnas, and 74 Miniratnas as on 13th September 2017. Nearly 300 CPSEs(central public sector enterprises) are in total.

Additional financial autonomy has been awarded to Certain public sector undertakings to compete in the global market so as to "support them in their drive to become global giants". These public sector companies have comparative advantages i.e., they are given greater autonomy. In 1997 initially, these financial autonomies were awarded as Navratna. Originally, the word Navratna means a composition of nine precious gems. The government established the higher category, Maharatna in the year 2010.

 

Guidelines for awarding Ratna status are as follows:

Maharatna PSUs

Companies having the authority to make foreign investments of up to Rs 5,000 crores without taking any Government approval are considered top public sector enterprises are given the status of Maharatna. The eligibility criteria to be considered for grant of Maharatna status is the following:

    • The company should gain annual net profit of over Rs. 5,000 crores.
    • The company should have a Navratna status.
    • The company's net worth should be of Rs. 15,000 crores.
    • The company should be listed on the Indian stock exchange, with a minimum prescribed public shareholding under SEBI regulations.
    • The company should have an average annual turnover of Rs. 25,000 crores over the past three consecutive years.

There are eight companies which have Maharatna status at present — Bharat Heavy Electricals (BHEL), Coal India Limited(CIL), GAIL (India), Indian Oil Corporation, NTPC, Oil Natural Gas Corporation (ONGC) Bharat Petroleum Corporation Limited and Steel Authority of India (SAIL).

 

Navratna PSU’s

The company which can invest up to Rs 1,000 crore without explicit government approval is given the status of Navaratna. This status is conferred to these companies by the Department of Public Enterprises. They also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad. The eligibility criteria to be considered for grant of Navaratna status is the following:

    • The company should have Miniratna Category – I status along with a Schedule ‘A’ listing.
    • The company should have at least 3 ‘Excellent’ or ‘Very Good’ Memorandum of Understanding (MoU) during the last five years.
    • The company should also have a composite score of 60 or above out of possible 100 marks in the 6 selected performance parameters:-
      1. Net Profit to Net Worth (25 marks/100 marks)
      2. Manpower cost to cost of production or services (15 marks/100 marks)
      3. Gross margin as capital employed (15marks/100 marks)
      4. Gross profit as Turnover (15marks/100 marks)
      5. Earnings per Share (10marks/100 marks)
      6. Inter-Sectoral comparison based on Net profit to net worth (20marks/100 marks)

There are sixteen companies which have Navaratna status at present — Bharat Electronics Limited, Container Corporation of India Limited, National Aluminium Company Limited (NACL), NMDC Limited, Neyveli Lignite Corporation Limited(NLCL), Power Grid Corporation of India Limited, Engineers India Limited, Hindustan Aeronautics Limited, Hindustan Petroleum Corporation Limited, Mahanagar Telephone Nigam Limited, National Buildings Construction Corporation Limited, Rashtriya Ispat Nigam Limited, Power Finance Corporation Limited, Oil India Limited, Rural Electrification Corporation Limited and Shipping Corporation of India Limited.

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