Government Company

Corporate enterprises power a country’s economy. These corporations play a critical role in handling the country’s index and Gross domestic product. These entities have an impact on the country’s economic position. A Government Company is one such undertaking. There are numerous government companies, including Power Finance Corporation Limited (PFCL), Chennai Petroleum Corporation Ltd. (CPCL), ONGC Mangalore Petrochemicals Limited (OMPL), Power Finance Corporation Limited (PFCL). 

Government companies are also referred to as Public Sector Undertakings. The public sector companies in India were formed with two main goals in mind:

• To achieve more significant equity within the distribution of the wealth of the country’s citizens.

• To build encouragement in the nation’s growth.

Public Sector Insurance Companies or the government insurance company in India are as follows:

• Life Insurance Corporation Of India

• General Insurance Corporation Of India

• The New India Assurance Company Limited

• United India Insurance Company Limited

• The Oriental Insurance Company Limited

Features of a Government Company

• It is a distinct legal BODY.

• It was formed in compliance with the Companies Acts 1956 and 2013.

• The provisions of the Companies Act to control and restrict management.

• The Memorandum and Articles of Association control the appointment of the workforce.

• A government company is supported by government shareholdings IN TERMS OF FUNDS as well as other private stock holdings are added reasons. The company can also raise funds on the stock exchange.

• A central government nominated authority evaluates a government company. This agency is largely responsible for India’s Comptroller and Auditor General (C&AG).  

Government companies in India

Central Public Sector Undertakings or Government companies in India with the highest profit margins are as follows:

• Oil and Natural Gas Corporation Limited (ONGC)

• Coal India Limited (CIL)

• Power Grid Corporation of India (PGCIL)

• National Thermal Power Corporation (NTPC)Gas Authority of India Limited (GAIL)

• Mahanadi Coalfields (MCL)

• Power Finance Corporation Limited (PFCL)

• Northern Coalfields (NCL)

• Rural Electrification Corporation (REC)

• Nuclear Power Corporation of India Ltd (NPCIL)

A few more government company examples are as follows:

Hindustan Steel Limited, Hindustan Shipyard, Airports Authority of India (AAI), Bharat Coking Coal Limited (BCCL), Bharat Electronics Limited (BEL), Power Grid Corporation of India(PGCIL), Hindustan Petroleum Corporation Limited (HPCL). 

Advantages of a Government Company

• To form a government corporate entity, all clauses of the Companies Act must be pursued.

• The government entity has full authority in managerial practices and adaptability in day-to-day operations.

• These corporations have power over the regional market and must maintain it to stop unethical business malpractices.

Limitations of a Government Company

• These businesses are subject to a great deal of government involvement and intervention by public servants, government members, and legislators.

• Because the government subsidizes these companies, they are exempt from all constitutional obligations such as reporting to the legislature.

• The company’s productive operations are hindered because the board of directors is primarily made up of legislators and public servants who are more worried about satisfying their political group colleagues or owners and less worried about the company’s progress and expansion. 

Role and Importance

The significance and nature of public companies have evolved. Let’s take a look at how these companies contribute to the country’s growth.

Scale economies

Sectors where a massive sum of money is needed, which private sector companies usually do not encompass, are handled by public sector companies. Public sector companies regulate power generation plants, oil and gas, and petroleum.

Regional equilibrium

Businesses will not affect multiple regions that are monetarily behind for the country’s general development. The majority of the development took place near port facilities, and the interior of the country was never managed to reach. To ensure that the entire nation grows balanced, public sector organizations take the lead and develop underserved areas.

Infrastructure development

At the time of independence, all major industries were few and had limited efficiency. Construction, steel, and iron, petroleum & gas refining and marketing, heavy goods machinery, and so on were among these industries.

Monopoly and Restrictive Trade Practices Control

The role of public sector companies in influencing the monopoly created by private sector companies is critical. Companies in the public sector adhere to Monopolistic and Restrictive Trade Practices guidelines.

Substitution of Imports

Public enterprises are also implicated in the fabrication and production of machinery and equipment that was initially imported from other countries. Organizations such as Metals and Minerals Trading Corporation of India have played a pivotal role in broadening Indian export and trade markets.  

Conclusion

In the above notes, we read about government companies in India. We also discussed government insurance companies in detail for more clarity.

Government Companies are public enterprises where either the state or the federal government owns at least 51 percent of the paid-up share capital. Like all other authorized ones, these kinds of public sector undertakings are applicable to the clauses of the Companies Act. Hindustan Machine Tools, State Trading Corporation of India, and other government-owned enterprises are examples of government-owned enterprises.

The Government Company is incorporated under the Companies Act, and all of its clauses apply to it. Because the government owns them in part or entirely, their shares are registered in the name of the nation. The government and other shareholders designate the board of directors to handle these public sector undertakings.