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    Privatization in India

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    ash a
    The document discusses Public Sector Undertakings (PSUs) and privatization in India. It defines PSUs as government-owned enterprises with over 51% stake held by the government. Privatization involves transferring ownership and management of public enterprises to the private sector. Reasons for privatizing PSUs include inefficient management, political interference, and inability to adapt to globalization. Some goals of privatization are to reduce the government's role in the economy and obtain funds to finance government debt. The document also lists problems faced by PSUs and different methods used for disinvesting government stake in PSUs.

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    Privatization in India

    Uploaded by

    ash a
    168 views16 pages
    The document discusses Public Sector Undertakings (PSUs) and privatization in India. It defines PSUs as government-owned enterprises with over 51% stake held by the government. Privatization involves transferring ownership and management of public enterprises to the private sector. Reasons for privatizing PSUs include inefficient management, political interference, and inability to adapt to globalization. Some goals of privatization are to reduce the government's role in the economy and obtain funds to finance government debt. The document also lists problems faced by PSUs and different methods used for disinvesting government stake in PSUs.

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    The document discusses Public Sector Undertakings (PSUs) and privatization in India. It defines PSUs as government-owned enterprises with over 51% stake held by the government. Privatization involves transferring ownership and management of public enterprises to the private sector. Reasons for privatizing PSUs include inefficient management, political interference, and inability to adapt to globalization. Some goals of privatization are to reduce the government's role in the economy and obtain funds to finance government debt. The document also lists problems faced by PSUs and different methods used for disinvesting government stake in PSUs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    168 views16 pages

    Privatization in India

    Uploaded by

    ash a
    The document discusses Public Sector Undertakings (PSUs) and privatization in India. It defines PSUs as government-owned enterprises with over 51% stake held by the government. Privatization involves transferring ownership and management of public enterprises to the private sector. Reasons for privatizing PSUs include inefficient management, political interference, and inability to adapt to globalization. Some goals of privatization are to reduce the government's role in the economy and obtain funds to finance government debt. The document also lists problems faced by PSUs and different methods used for disinvesting government stake in PSUs.

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    Presented By : Aashima Arora C 03 Animesh Bharti C 08 Lavanya K.

    C 19 Ankita Pandey C 33 Kala Swaraj C 53

    What is a PSU ?
    Government

    owned enterprise Majority stake (more than 51%) held by govt Classified into three types : a) CPSE b) PSE c) PSB

    PRIVATISATION
    Privatization

    is defined as transfer of ownership and management of enterprises from the public to private sector. Relatively new concept, originated in 1980s The term coined by Peter F Drucker Margaret Thatcher : Gave it an identity in practical terms

    Reasons For Privatisation


    Inefficient Management Price Policy Political factors influencing decision Excess Manpower

    Delay in completion & high cost

    Goals Of Privatisation
    Reduce governments role in the economy
    Obtain the sales proceeds & use them to finance government debt

    Share ownership

    Goal

    WHY PRIVATISATION

    Inability to improve management system and respond to challenges of globalisation Inability to be flexible and efficient in the face of competition.eg BSNL Inability to sustain long term funding of losses of PSU Deregulation of industry, in order to enable firms in the public sector to compete & survive

    Why privatisation (contd...)


    Exposing firms to market discipline and promoting wider share ownership. The need to raise FDI for increased in the country. It injects new value into public assets and increases privately held capital base of country Liquidity constrained government facing fiscal pressure in a view to finance fiscal deficits.eg argentina in 1989

    PROBLEMS FACED BY PSUs


    POLITICAL INTERFERENCE HIGH COST OF DELAY FEAR OF SCAM

    Contd
    INEFFECTIVE MANAGEMENT TRADE UNIONISM HEADLESS PLANTS

    Contd
    UNUTILISED CAPACITIES

    UNIMAGINATIVE PRODUCTION

    Eg-surgical instruments plant, Chennai

    2007

    offered postal and package delivery services, banking services, and life insurance
    over 400,000 employees and ran 24,700 post offices throughout Japan Japan Post also held about 140 trillion (one fifth) of the Japanese national debt in the form of government bonds government-owned corporation from 20032007, nation's largest employer On October 1, 2007 Japan Post was privatized following fierce political debate that was settled by the 2005 general election

    Lagan Jute Machinery Corporation Limited


    First Successful Privatisation in India
    Calcutta based company Manufactured jute machinery

    Growth Opportunity
    High Potential company with good quality products Only supplier of its type

    Privatised in 1997 with 74% stake to strategic partner


    Retained initial senior management Industry Expert hired & made the MD of LJMC

    LJMC BEFORE & AFTER PRIVATISATION


    Particulars Gross Turnover Profit/Loss Orders Booked Export of Spares Pre-privatisation Rs 6 million Incurred Loss Rs 12 Million Rs 0.5 Million Post -privatisation Rs 24 Million Showed Profit Rs 15 Million Rs 1.6 Million

    Source : http://www.divest.nic.in/chap10-old.asp

    Disinvestment In PSUs

    Infuse New Capital

    New technolo gy

    Need originated as PSUs till 1991 had negative ROR New Managem Affected as per Statement of Industrial ent Policy 1991 Part of Government shareholding thrown open to other financial institutions Primary Objective was to raise capital for further growth & convert them from liabilities into assets

    Methods Of Disinvestment
    Cross Holdings Strategic Sale Management Employee Buyout

    Reduction in Equity

    Capital markets

    PSUs Undergone Disinvestment


    NAME BALCO Maruti Udyog Ltd. HCI Hotels ITDC IPCL VSNL Lagan Jute Machinery Corp % OF GOVT EQUITY SOLD 51 4 100 51 26 25 74 STATUS DURING DISINVESTMENT Profit making Profit making Loss making Loss making Profit making Profit making Loss making

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