PSUs are companies whose majority of the equity stake is owned by the Government, central or state. PSUs hold immense significance in the Indian economy, driving infrastructure and employment, and are listed on stock exchanges, making them essential investment avenues. For investors, PSUs often represent stability, high dividend payouts, and a strong backing from the government.
However, they also face unique challenges related to operational efficiency and policy mandates. Understanding the current landscape, performance, and government reforms concerning these massive state enterprises is crucial for anyone interested in these avenues.
Also Read, What Is Stock Exchange?
Key Takeaways
-
On the basis of performance and autonomy, India classifies its central public sector enterprises into three categories: Miniratna, Navratna, and Maharatna.
-
Companies with steady profits and less control over decision-making are Miniratna.
-
Navratna companies have significant financial and operational power. However, for this, they need to meet strict performance criteria.
-
The largest and strongest CPSEs are Maharatnas. They have the highest level of autonomy and contribute significantly to India’s economy.
Definition of PSU (Public Sector Undertaking)
The government must hold at least 50% of the paid-up share capital for a company to be considered a PSU. They are classified as Central PSUs or State PSUs based on who owns them. The government also appoints most of the directors and controls the management. PSUs are sometimes called statutory corporations, nationalised companies, or government-owned businesses.
Role of Public Sector Undertakings
Public sector undertakings play an important role in India’s economic and social development. They operate in key sectors, provide essential services, and support national growth. Their work benefits both the economy and society.
-
Economic Growth: PSUs drive growth by building infrastructure, using modern technology, and improving production efficiency.
-
Infrastructure Development: They build transport, power, irrigation, communication, and water supply projects, often investing in long-term, large-scale initiatives.
-
Industry Development: PSUs support heavy and basic industries like steel, cement, electricity, petroleum, and fertilisers, where private investment is limited.
-
Public Utilities: They provide affordable services such as electricity, water, transport, airlines, railways, and telecom.
-
Employment Creation: PSUs generate jobs on a large scale and safeguard employee interests.
-
Government Revenue: They contribute via taxes and profits, helping fund development projects.
-
Social Welfare & Balanced Development: PSUs offer subsidised goods, control essential prices, and promote growth in less developed regions.
Different Types of PSUs Based on Ownership
Public sector undertakings (PSUs) can be classified based on who owns them. Ownership determines how much control the government has and how these companies are managed. Understanding the types of PSUs helps in knowing their role and importance in the economy.
-
Central Public Sector Enterprises (CPSEs): These are companies where the Central Government owns at least 51% of the share capital. CPSEs are further divided into strategic and non-strategic companies. Strategic CPSEs operate in areas crucial for national interest, like defence and energy, while non-strategic ones work in other sectors.
-
State Level Public Enterprises (SLPEs): In these companies, the State Government owns 51% or more of the shares. They focus on state-level priorities, such as local infrastructure, utilities, and development projects.
-
Public Sector Banks (PSBs): These banks are controlled by the Central Government or other PSBs, with a minimum of 51% ownership. They play a key role in providing banking services, supporting economic growth, and implementing government schemes.
These classifications ensure clear ownership, governance, and accountability of public sector undertakings in India.
Miniratna Status
The Miniratna status is granted to CPSEs that exhibit consistent profitability, financial stability, and operational efficiency. This status empowers CPSEs with certain decision-making powers and operational autonomy within specified thresholds. There are two sub-categories under Miniratna:
-
Miniratna-I: CPSEs with profits for three consecutive years, a pre-tax profit exceeding ₹30 crore in at least one of those years, and a positive net worth are classified as Miniratna-I PSUs. These companies have demonstrated robust financial performance and management capabilities.
-
Miniratna-II: CPSEs with a continuous profit streak and positive net worth for the last three years are categorised as Miniratna-II companies. They showcase financial resilience and operational excellence, contributing significantly to India's economic growth.
A CPSE shall also meet certain additional requirements, such as avoiding missing payments on loans or interest owed to the government. Miniratna enterprises are also independent of government guarantees and budgetary backing.
Miniratna Category-I Central Public Sector Enterprises (CPSEs)
Here is a list of some of the top Category-I Miniratna Central Public Sector Enterprises (CPSEs):
|
Company |
Stock Ticker |
|
Grid Controller of India Limited |
GRID-INDIA |
|
Airports Authority of India |
AAI |
|
Antrix Corporation Limited |
ANTRIX |
|
Bharat Dynamics Limited |
BDL |
|
Bharat Earth Movers Limited |
BEML |
|
Hindustan Aeronautics Limited |
HAL |
-
Grid Controller of India Limited (GRID-INDIA): Established in 2009, GRID-INDIA ensures the smooth operation of the Indian Power System. It focuses on efficient power transfer within and across regions and facilitates international power exchanges. The company also manages competitive wholesale electricity markets and settlement systems.
-
Airports Authority of India (AAI): Founded in 1995, AAI operates under the Ministry of Civil Aviation, Government of India. AAI's responsibilities include developing, upgrading, and managing civil aviation infrastructure across India. It also manages a network of 137 airports, including international, domestic, and customs airports, along with civil enclaves.
-
Antrix Corporation Limited: Established in 1992, Antrix Corporation operates under the Department of Space. It provides services such as transponder provisioning, remote sensing, spacecraft and subsystems, and mission support. Antrix also offers a ground infrastructure for space-based needs.
-
Bharat Dynamics Limited (BDL): Founded in 1970, BDL specialises in manufacturing guided weapon systems. It operates manufacturing units in Hyderabad, Telangana, and Visakhapatnam, Andhra Pradesh. BDL's product range includes surface-to-air missiles, air defence systems, torpedoes, and air-to-air missiles.
-
Bharat Earth Movers Limited (BEML): Headquartered in Bangalore, BEML was established in 1964. BEML manufactures earthmoving equipment, underground mining equipment, railway equipment, and heavy-duty hydraulic aggregates. It has manufacturing plants in Karnataka and Kerala.
-
Hindustan Aeronautics Limited (HAL): HAL, headquartered in Bangalore, operates under the Ministry of Defence. Involved in aerospace operations, HAL designs, fabricates, and assembles aircraft, jet engines, helicopters, and spare parts.
Also checkout, Bharat Dynamics Share Price Live
Navratna Status
Navratna CPSEs enjoy greater financial and operational autonomy, enabling them to undertake strategic initiatives, investments, and international collaborations more efficiently. CPSEs with Miniratna-I status are eligible for Navratna status if they meet certain criteria, including excellent performance ratings and a composite score in specified performance indicators. The criteria for Navratna status include:
-
Obtaining an "Excellent" or "Very Good" rating in Memorandum of Understanding (MoU) assessments for three out of the last five years.
-
Achieving a composite score of 60 or more in six selected performance indicators, including:
-
Net Profit to Net Worth
-
Manpower Cost to Total Cost of Production
-
PBDIT (Profit before depreciation, interest and tax) to Capital Employed
-
PBIT to Turnover
-
Earnings Per Share
-
Inter-Sectoral Performance.
Navratna Central Public Sector Enterprises (CPSEs)
Here is a list of some of the top “Navratna” Central Public Sector Enterprises (CPSEs):
|
Company |
Stock Ticker |
|
Bharat Electronics Limited |
BEL |
|
Container Corporation of India |
CONCOR |
|
Engineers India Limited |
EIL |
|
Mahanagar Telephone Nigam Limited |
MTNL |
-
Bharat Electronics Limited (BEL): Founded in Bengaluru, Karnataka, India, in 1954, BEL is a state-owned aerospace and defence company with nine factories and regional offices. The company’s product range includes Avionics, Radars, Weapon Systems, C4I Systems, and Electronic Voting Machines.
-
Container Corporation of India (CONCOR): Established in 1988 under the Ministry of Railways, CONCOR took over seven inland container depots from Indian Railways in 1989. It played a crucial role in India's containerised cargo transport, introduced in 1966. Rail transport is often preferred for cargo over medium and long distances due to India's vast size.
-
Engineers India Limited (EIL): Founded in 1965 under the Ministry of Petroleum and Natural Gas, EIL provides engineering services for petroleum refineries and industrial projects. It specialises in petroleum refining, petrochemicals, pipelines, offshore and onshore oil and gas, terminals, mining, infrastructure, etc.
-
Mahanagar Telephone Nigam Limited (MTNL): Established in 1986, MTNL is a state-owned telecommunications service provider headquartered in New Delhi. It offers services in Mumbai, New Delhi, and Mauritius.
Also checkout the Container Corporation Of India Share Price Live
Maharatna Status
The Maharatna status is the highest accolade among CPSEs; they are industry giants known for their innovation, leadership, and contributions to national development. To qualify for Maharatna status, CPSEs must meet stringent criteria, including:
-
Holding Navratna status.
-
Being listed on Indian stock exchanges.
-
Complying with minimum shareholding norms.
-
Achieving an average annual turnover of more than ₹25,000 crore, average annual net worth of over ₹15,000 crore, and average annual net profit of over ₹5,000 crore in the last three years.
Maharatna Central Public Sector Enterprises (CPSEs)
Here is a list of some of the top “Maharatna” Central Public Sector Enterprises (CPSEs):
|
Company |
Stock Ticker |
|
National Thermal Power Corporation |
NTPC |
|
Oil and Natural Gas Corporation |
ONGC |
|
Steel Authority of India Limited |
SAIL |
|
Bharat Heavy Electricals Limited |
BHEL |
|
Indian Oil Corporation Limited |
IOCL |
-
National Thermal Power Corporation (NTPC): In May 2010, the Indian government granted NTPC Maharatna status. Founded on 7 November 1975, NTPC operates from 70 locations in India, one in Sri Lanka, and two in Bangladesh. Its five regional headquarters oversee the company's operations in India.
-
Oil and Natural Gas Corporation (ONGC): Established on 14 August 1956, ONGC transitioned from the Oil and Natural Gas Directorate to the Oil and Natural Gas Commission under the Indian Government. It plays a significant role in exploring and exploiting hydrocarbons across 26 sedimentary basins in India. Additionally, ONGC manages over 11,000 kilometres of pipelines within the country.
-
Steel Authority of India Limited (SAIL): Based in New Delhi, SAIL is a state-owned steelmaker and ranks as the 20th-largest steel producer globally and the 3rd-largest in India. SAIL operates five integrated steel plants and three special steel plants across India.
-
Bharat Heavy Electricals Limited (BHEL): BHEL designs, engineers, manufactures, and services products for various core sectors like power, transportation, renewable energy, oil and gas, and defence. The company supplies Indian Railways with electric locomotives and defence equipment like the Super Rapid Gun Mount (SRGM) naval guns.
-
Indian Oil Corporation Limited (IOCL): As India's largest commercial oil company, IOCL has diversified into alternative energy and global downstream operations. It has subsidiaries in multiple countries and engages in refining, pipeline transportation, marketing petroleum products, and exploration and production of crude oil, natural gas, and petrochemicals.
Conclusion
The role of public sector undertakings extends beyond business. PSUs also promote social welfare by offering subsidised goods, controlling prices of essentials, and ensuring services reach underserved areas.
PSUs can be classified based on ownership. These classifications ensure proper governance, accountability, and operational efficiency. The further categorisation of CPSEs into Miniratna, Navratna, and Maharatna highlights their performance, autonomy, and strategic importance.
Understanding PSUs and their types helps investors, stakeholders, and policymakers make informed decisions while recognising their significant contribution to India’s growth.