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What are PSUs? An overview of PSU companies in India

What are PSUs? An overview of PSU companies in India

Curious about what PSUs are and how they shape India’s economy?

Our blog provides an easy-to-understand introduction to Public Sector Undertakings (PSUs) in India, covering what they are, and how to see them as career.

How PSU came into existence?

Public Sector Undertakings (PSUs) in India came into existence primarily through the process of nationalization, which began in the 1950s.

The government took over private enterprises in key sectors such as energy, telecommunications, banking, and infrastructure to ensure greater state control and regulation over strategic industries.

This move was aimed at promoting equitable economic growth, ensuring social welfare, and fostering self-reliance in various sectors crucial for national development. Over time, PSUs have evolved to become integral components of India’s economic landscape, playing significant roles in driving growth, providing employment, and delivering essential services to the population.

Categories of PSUs

Public Sector Undertakings (PSUs) are categorized into three main groups:

  1. Central Public Sector Enterprises (CPSEs)
    • Strategic
    • Non-Strategic
  2. Public Sector Banks (PSBs)
  3. State Level Public Enterprises (SLPEs)

Central Public Sector Enterprises (CPSEs): These are entities directly governed by the Central Government or by other CPSEs with a majority ownership stake of 51% or more. CPSEs are further distinguished into two types:

Strategic CPSEs: Engaged in sectors such as defense, atomic energy, and railways transport.

Non-strategic CPSEs: Covering various other sectors outside of strategic domains.

Public Sector Banks (PSBs): PSBs are financial institutions controlled either by the Central Government or by other PSBs, owning 51% or more of the capital shares.

State Level Public Enterprises (SLPEs): These are companies under the direct control of the State Government or by other SLPEs holding 51% or more of the capital shares.

Categories Based on Finincial Performance

The Public Sector Undertakings are generally categorized into Maharatna, Navaratna and Miniratna Companies based on various factors like average turnover, net profit, net worth etc.

1) Maharatna PSUs

Maharatna PSUs are generally the government companies with an average annual net profit of over Rs. 5000 crores for 3 years or average annual net worth of Rs. 10,000 crore for 3 years, or average annual turnover of Rs. 20,000 crore for 3 years. Such companies are free to decide on investments up to 15% of their net worth in a project.

As of now, there are a few Maharatna PSUs in India, including:

  1. Indian Oil Corporation Limited (IOCL)
  2. Bharat Heavy Electricals Limited (BHEL)
  3. Coal India Limited (CIL)
  4. NTPC Limited
  5. Oil and Natural Gas Corporation (ONGC)
  6. Steel Authority of India Limited (SAIL)
  7. Gas Authority of India Limited (GAIL)
  8. Bharat Petroleum Corporation Limited (BPCL)

2) Navaratna PSUs

Navaratna PSUs are generally awarded for the companies having a score of 60 (out of 100), based on various parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest, and Taxes), capital employed, etc.

Miniratna PSU companies are the fast-moving government companies with a positive net worth earning around 30 crores of net profit.

Some examples of Navratna companies in India include:

  1. Bharat Electronics Limited (BEL)
  2. Bharat Petroleum Corporation Limited (BPCL)
  3. Container Corporation of India Limited (CONCOR)
  4. Engineers India Limited (EIL)
  5. Hindustan Aeronautics Limited (HAL)
  6. Hindustan Petroleum Corporation Limited (HPCL)
  7. Mahanagar Telephone Nigam Limited (MTNL)
  8. National Aluminium Company Limited (NALCO)
  9. Power Finance Corporation Limited (PFC)
  10. Rural Electrification Corporation Limited (REC)

3) Miniratna I and II PSUs

In October 1997, the Government introduced measures to grant greater autonomy and financial authority to certain profitable companies, distinct from Navratnas, aimed at enhancing their efficiency and competitiveness.

These categories, termed Category I and Category II, were established with specific eligibility criteria and guidelines.

Miniratna Category I

These are a subset of Miniratna companies that have demonstrated higher levels of performance and operational efficiency compared to Miniratna Category II PSUs. Examples of Miniratna Category I PSUs include:

  • Bharat Electronics Limited (BEL)
  • Hindustan Aeronautics Limited (HAL)
  • National Mineral Development Corporation (NMDC)
  • Power Finance Corporation (PFC)
  • Rural Electrification Corporation (REC)

Miniratna Category II

These companies have also demonstrated profitability and operational efficiency, but they may have certain limitations in terms of financial and administrative powers compared to Category I PSUs. Examples of Miniratna Category II PSUs include:

  • Bharat Immunologicals & Biologicals Corporation Limited (BIBCOL)
  • Central Railside Warehouse Company Limited (CRWC)
  • Ferro Scrap Nigam Limited (FSNL)
  • Hindustan Prefab Limited (HPL)
  • Mahanadi Coalfields Limited (MCL)

How to get your career into PSUs?

Every PSU company has its own way of the recruitment. Each PSU used to conduct own exam and interview schedule before. But presently almost all the PSU consider GATE Score as a major factor in the process of recruitment.

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