By CA.

Umesh Dodeja
 PUBLIC SECTOR ORGANISATIONS
 Public Sector Organisations are those
organisations which are owned, financed,
managed and controlled by government
or combination of governments.

Forms

Departmental Government
Statutory Corporation
Organisation (eg. Company (eg. HPCL,
(eg. Reserve Bank of
Post office, Railways, BPCL, NTPC, BHEL,
India, LIC, etc)
Radio) etc.)
 DEPARTMENTAL ORGANISATION
 The organisation which is
owned, managed, controlled
and financed by Govt. is
known as Departmental
Organisation.
 It is the oldest form of
business organisation.
Departmental Organisation
performs its all activities as
an integral part of
government only.
 DEPARTMENTAL ORGANISATION
 The Minister-in-charge of
ministry is head of this
organisation.
 All departmental organisations
act through officers of the
government and all
employees are called as
government employees.
Examples:- Post Office,
Railways, Defence Industries,
Radio, Public Utility Services
etc.
Features of Dept. Org.

MRF DoGoNo
 Managed by Govt.
 Run by Govt.
 Financed by Govt.
 DoA – Delegation of
Authority
 Govt. Employees
 No separate legal entity
FEATURES OF DEPARTMENTAL ORGANISATION
 [Link] by Government:
 Departmental Organisation is managed by a concerned
government department. Minister at the top is responsible to
the Parliament for its operations.

 2. Run by the Government:

 Different procedures like budgeting, accounting and auditing
are at par with government departments.

 3. Financed by the Government:

 Departmental Organisation is financed through annual
budget appropriations made by the legislature and its
revenues are directly paid to the government treasury
FEATURES OF DEPARTMENTAL ORGANISATION
 4. DoA - Delegation of Authority:
 The downward delegation of authority is affected from the
top executive to every part of the organisation.

 5. Government Employees:
 Since it is an integral part of the Government, the staff of
the enterprise is treated equally with other civil servants for
all purposes with other government employees.

 6. No Separate Legal Entity:

 Departmental organisation has no separate existence from
government. It is working under concerned ministry.
 MERITS & DEMERITS OF DEPT. ORGN
 D2H Proper  D2H Lack of
Maintain Qualified Absence me Red ho
Staff karta hai jata hai !
 Direct Control  Delay in Action
 Delayed Decisions
 Direct Revenue to
 Have Less scope for
Govt. initiative
 Has Less Overheads  Lack of Flexibility
 Proper use of funds  Absence of
 Maintains Secrecy professionalism
 Red Tapism & Bureaucracy
 Qualified Staff
 MERITS OF Departmental Organisation
◦ D2H Proper Maintain Qualified
Staff karta hai !!
◦ 1. Direct Control: In departmental organisation
there is a direct and absolute control of
government over the enterprise.
◦ 2. Direct Revenue to the Government: The
revenues of the enterprise directly go to the
Government treasury in a Departmental
Organisation.
◦ 3. Has Less Overheads: As departmental
organisations are operated by government
themselves, the administrative overhead charges
are less.
 MERITS OF Departmental Organisation
◦ D2H Proper Maintain Qualified
Staff karta hai !!
◦ 4. Proper use of Funds: Since these
undertakings are subject to strict control and
supervision, chances for misuse of funds are less
in departmental organisation.
◦ 5. Qualified Staff: These organisations are
properly managed and supervised by the
qualified staff.
◦ 6. Maintains Secrecy: These organisations
maintain maximum secrecy on policy matters
and also they take care of essential goods and
services.
DEMERITS OF Departmental Organisation
 D2H Lack of Absence me Red ho
jata hai !
 1. Delay in Action: As departmental
organisations are controlled by government, there
is excessive centralization of authorities which
leads to delay in action.
 2. Delayed Decisions: For each and everything,
the sanctioning of the Minister or the top executive
is essential. The executives at the lower level
cannot take any decision.
 3. Have Less Scope for Initiative: There is no
scope for the initiative and skill as the procedures
and policies are subject to the criticism in the
Parliament.
DEMERITS OF Departmental Organisation
 D2H Lack of Absence me Red ho
jata hai !
 4. Lack of Flexibility: Departmental
organisation always lacks flexibility due to
excessive control and supervision by the
government.
 5. Absence of professionalism: Absence of
professionalism, fear of public criticism, frequent
transfers of officials and staff affects the
efficiency of these organisations.
 6. Red Tapism and Bureaucracy: There is
always problem of Red tapism and bureaucracy in
departmental organisation which affects it’s
trustworthiness.
 GOVERNMENT COMPANY

The company which is registered under Companies Act,2013 having

minimum 51% of paid-up share capital held by the central government
or any state government or partly by central government and partly by one
or more state governments is known as Government Company.
Examples - 1) National Thermal Power Corporation (NTPC) 2) Bharat Heavy
Electricals Limited (BHEL)
 GOVERNMENT COMPANY

The shares of government company are purchased in the

name of The President of India or in the name of Governor
of a State.
 SOME IMPORTANT CONCEPTS
1. Annual Reports: In Government Company, annual reports and audit
reports are laid or presented before the Parliament.
2. Appointment of Auditors: Government on the advice of Comptroller
and Auditor General of India appoints auditor for a government
company.
3. Shareholding: A Government company may either wholly or partially
owned by Government. In wholly owned company, 100% capital is
provided by the government. In partially owned companies minimum
51% capital is held by the government or combination of governments.
Private concerns can hold maximum 49% share capital.
4. Management: The management of government company is in the hands
of Board of Directors who are nominated by the government and
private investors together.
 FEATURES OF GOVERNMENT COMPANY
1. REGISTRATION UNDER COMPANIES ACT, 2013
A Government company is formed through registration
under the Companies Act, 2013 and such registration is
mandatory
2. SEPARATE LEGAL ENTITY
A Government company is a legal entity separate from
the Government. It can acquire property; can make
contracts and can file suits in its own name.
3. MAJORITY OF GOVERNMENT DIRECTORS
In Government company major capital is held by
Government. So in Board of Directors maximum
directors are appointed by respective Government.
 FEATURES OF GOVERNMENT COMPANY
4. OWN STAFF
A Government company has its own staff except
Government officials who are sent on deputation.

5. FREE FROM PROCEDURAL CONTROLS

A Government company is free from budgetary,
accounting and audit controls which are applicable to
Government undertakings.
 MERITS & DEMERITS OF GOVT. CO.
 Discipline aur  Double Lack aur
professional acha ho Fear k wajah se
toh Internal marks Independent
Bahot Easily (Easy Easy) character exists
public ko milte hai only in Name
 Discipline  Lack of Expertise
 Professional Management
 Lack of Professional view
 Easy Formation
 Fear of Exposure
 Easy to Alter
 Independent character
 Internal Autonomy
exists only in name
 Public Accountability (autonomy)
 MERITS OF GOVT. CO.
 Discipline
 The Government Company is subject to the provisions of the
Companies Act which keeps the management of the company
active, alert and disciplined.
 Professional Management
 A Government company can employ professionally qualified
managers because it has its own personnel policies
 Easy Formation
 A Government company can be easily formed under the
Companies Act, just by an executive decision of the
government.
 Easy to Alter
 Internal Autonomy
 MERITS OF GOVT. CO.
 Easy to Alter
 Objectives and powers of the Government Company can be
changed by simply altering the Memorandum of Association of
the company, without seeking the approval of the Parliament
 Internal Autonomy
 A government company can manage its affairs independently. It
is relatively free from ministerial control and political
interference, in its day-to-day functioning.
 Public Accountability
 TheAnnual Report of a Government company is presented to the
Parliament/ State Legislature. These reports can be discussed
and debated there.
 DEMERITS OF GOVT. CO.
 Lack of Expertise: The key personnel of a
Government company are often deputed from
Government departments. Such person generally
lack expertise and commitment leading to lower
operational efficiency of the government company.

 Lack of Professional View : Sometimes there is

lack of professional view while taking decisions by
the board as these companies are more bounded
with fullfilment of social objectives of the business.
 DEMERITS OF GOVT. CO.
 Fear of Exposure: The annualreport ofthe government
company is placed before the Parliament/State Legislature.
The working of the company is exposed to press and public
criticism. Therefore, management of the Government
Company often gets demoralized and may not take
initiative to come out with and implement something
innovative.
 Autonomy only in Name: Independent character of a
Government company exists only in name. In reality,
politicians, ministers, Government officials, interfere
excessively in the day-to-day working of the government
company.
 STATUTORY CORPORATION

A Statutory Corporation is an autonomous

corporate body created by the Special Act of
the parliament or state legislature with
defined powers, functions and duties. State
helps statutory corporation by subscribing to its
capital. For example, RBI, LIC etc.
 Features of Stat. Corp. (NO CASH FINANCE)
 1. No Political Interference: A Statutory Corporation comes into
existence by following particular act or statute therefore there is
no political interference in formation, working and administration
of a statutory corporation. All statutory corporations are free from
political interference.

 2. Corporate Body: Statutory corporation is an artificial person

created by law. It is managed by the board of directors constituted
by the government.

 3. Answerable to the Legislature: A statutory corporation is

answerable to parliament or state assembly whomsoever creates
it. Parliament has no right to interfere in the working of
statutory corporations. It can only discuss policy matters and
overall performance of the corporations.
Features of Stat. Corp. (NO CASH FINANCE)
 4 . Seperate Independent Legal Entity in the eyes of law :-
A corporation has a right to enter into contracts and can
undertake any kind of business under its own name.

 5. Has Own Staffing System: Employees are not government

servants. They are recruited, remunerated and governed as per
the rules laid down by the corporation.

 6. Financially Independent :- The capital is contributed by

the Government at the time of establishment. However, this
type of organisation will stand financial independent for
managing their day to day affairs. Additional capital if required
can be contributed by the Government.
 MERITS & DEMERITS OF STAT. CORP.
 No Political Interference  Autonomy on paper only
 Quick Decisions (Politicial interference is
 Professional Management still there)
 Efficient Staff  Lack of Initiative
 Easy to Raise Capital  Rigid Structure (for any
amendment)
 Unfair Practices
 MERITS OF STAT. CORP.
 No Political Interference:-
 Operations and management of a statutory corporation is done
independently without any government’s interference, with its own
initiative and flexibility. They are also able to manage its affairs
with independence and flexibility
 Quick Decisions:- A statutory corporation is relatively free from
red tapism, as there is less file work and less formality to be
completed before taking decisions.
 Professional Management :- Board of directors of statutory
corporation consists of business experts and the representatives of
various groups such as labour, consumers etc. who are nominated
by the government.
 MERITS OF STAT. CORP.
 Efficient Staff :- The statutory corporations can have their own
rules and regulations regarding remuneration and recruitment of
employees. It provides better facilities and attractive terms of
service to staff to secure efficient working from its staff.

 Easy to Raise Capital :- Such corporations are fully owned by the

government, they can easily raise required capital by floating
bonds at a low rate of interest. These bonds are safe, the investors
also feel comfortable in subscribing such bonds.
 DEMERITS OF STAT. CORP.
 Autonomy on paper only (Politicial interference is still
there)
 The autonomy and flexibility of statutory corporation is only for
namesake. Practically, ministers, government officials and political
parties often interfere with the working of these corporations.
 Lack of Initiative
 Statutory corporations do not have to face any competition and are
not guided by a profit motive. So the employees do not take initiative
to increase the profit and reduce loss
 Rigid Structure (for any amendment)
 The objects and powers of statutory corporations are defined by the
Act and these can be amended only by amending the Statute or the
Act. Amending the Act is a time-consuming and complicated task.
 Unfair Practices:- The governing board of a statutory corporation
may indulge in unfair practices. It may charge an unduly high price to
cover up inefficiency.
 DISTINGUISH BETWEEN
 PUBLIC V/S PRIVATE
 DEPARTMENTAL V/S STATUTORY
 STATUTORY V/S GOVERNMENT COMPNAY
 DEPARTMENTAL V/S GOVERNMENT COMPANY

 (REFER TEXTBOOK)
MNC – MULTI-NATIONAL CORPORATIONS
 MNC – MULTI-NATIONAL CORPORATIONS

A multinational corporation is a business

organisation that operates in many
different countries at the same time.

In other words, it’s a company that has

business activities in more than one
country.
 MNC – MULTI-NATIONAL CORPORATIONS

These corporations are also referred as:-

TRANS-NATIONAL, INTERNATIONAL
ORGANISATIONS
 FEATURES OF MNC

1) HUGE ASSETS & TURNOVER

2) INTERNATIONAL OPERATIONS
3) CENTRALISED CONTROL
4) MIGHTY ECONOMIC POWER (POWERFUL
ECONOMIC ENTITY)
5) ADVANCED & SOPHISTICATED TECHNOLOGY
6) PROFESSIONAL MANAGEMENT
 MERITS OF MNC

1) LARGE EMPLOYMENT GENERATION

2) INFLOW OF FOREIGN CAPITAL
3) PROPER USE OF IDLE RESOURCES
4) TECHNICAL DEVELOPMENT OF POOR COUNTRIES
5) MANAGERIAL DEVELOPMENT IN HOST COUNTRIES
6) END OF LOCAL MONOPOLIES
7) IMPROVEMENT IN STANDARD OF LIVING
8) PROMOTION OF INTERNATIONAL BROTHERHOOD
& CULTURE
 DE-MERITS OF MNC
1) DANGER FOR DOMESTIC INDUSTRIES
2) REPATRIATION OF PROFITS (SENDING PROFITS
TO ANOTHER COUNTRY)
3) INTERFERENCE IN THE POLITICAL AFFAIRS OF
HOST COUNTRY
4) DISREGARD OF THE NATIONAL INTERESTS OF
HOST COUNTRY
5) MISUSE OF MIGHTY STATUS
6) EXPLOITATION OF NATURAL RESOURCES
7) EXPLOITATION OF PEOPLE
8) SELFISH PROMOTION OF ALIEN CULTURE