privatization in india
TRANSCRIPT
Presented By :Aashima Arora – C 03Animesh Bharti – C 08
Lavanya K. – C 19Ankita 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 1980’s The term coined by Peter F Drucker Margaret Thatcher : Gave it an identity in
practical terms
Reasons For Privatisation
Goals Of Privatisation
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
Contd…
Contd…
• 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 2003–2007, nation's largest employer
• On October 1, 2007 Japan Post was privatized following fierce political debate that was settled by the 2005 general election
2007
Lagan Jute Machinery Corporation Limited
LJMC BEFORE & AFTER PRIVATISATION
Particulars Pre-privatisation Post -privatisation
Gross Turnover Rs 6 million Rs 24 Million
Profit/Loss Incurred Loss Showed Profit
Orders Booked Rs 12 Million Rs 15 Million
Export of Spares
Rs 0.5 Million Rs 1.6 Million
Source : http://www.divest.nic.in/chap10-old.asp
Disinvestment In PSU’s
• Need originated as PSU’s till 1991 had negative ROR• Affected as per Statement of Industrial
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
PSU’s Undergone Disinvestment
NAME % OF GOVT EQUITY SOLD
STATUS DURING DISINVESTMENT
BALCO 51 Profit making
Maruti Udyog Ltd. 4 Profit making
HCI Hotels 100 Loss making
ITDC 51 Loss making
IPCL 26 Profit making
VSNL 25 Profit making
Lagan Jute Machinery Corp
74 Loss making