Home Financial & Banking Terms What is a PSU (Public Sector Undertaking)?

What is a PSU (Public Sector Undertaking)?

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Sreya Ray
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Public sector undertakings or PSUs are organizations the majority (51% or more) of whose shares or capital is owned by the Central Government or by one or more State Government. PSUs which earn huge profits are honored with titles like “Maharatnas ” and “Navaratnas”.

The criteria for classification are :

Maharatnas Navaratnas
Since the last 3 years the company generated an average profit of Rs. 2500 cr or more The company should had been a Miniratna
The average networth for the last 3 years is Rs.10000 cr or Score at least 60% on 6 parameters
The average annual turnover for the last 3 years is RS.20000 cr It should have 4 independent director

 

There are more than 200 PSUs in India.

Some of the Maharatna companies are:

  • NTPC Limited
  • Coal India Limited
  • ONGC Limited
  • SAIL, etc

Some of the Navaratnas are :

  • GAIL Limited
  • Power Grid Corporation of India Limited
  • Oil India Limited
  • Shipping Corporation of India Limited, etc

Role of PSU s in India :

  • PSUs ,mainly the PSU Banks provide much support to the agricultural sector of our country
  • Though their main focus is not profit making, they need to generate profit to make their existence viable.
  • Develop area where the country is lagging behind.
  • Labor Welfare
  • Self sufficiency of the country.
  • Generate Employment
  • To strengthen the defense sector of our country
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Sreya Ray
Sreya Ray is working as a Manager at State Bank of India. She is a voracious reader and a passionate writer. Her life is complete with her daughter and the support of her husband and the inspiration of her parents. Sreya loves multi-tasking and is a dreamer. If she don't create anything on a day,She feels that she had wasted my day.

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2 COMMENTS

  1. Something essential for country and economic growth? Definitely, I’d say. Public Sector Undertaking seems to support those areas which need development through government means. I am guessing a lot of essential development, such as farming, is very risky for big banks to invest in which is why PSU is so important. Farming may be seen as a risk due to so many factors in weather, crop harvest, animal health - but these are essentials! To provide labour within the country and increase GDP.

  2. Its exciting to know that there is so much to understand within the terms you use daily. I have been reading the term PSU in newspapers and watching the same on TV news. But I really never tried to understand the abbreviation, or deep concept. I am glad I could read this post, Nice one.

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