COMMERCE TREASURE

CHANGING ROLE OF PUBLIC SECTOR At the time of Independence, it was expected that the public sector enterprises would play an important role in achieving certain objectives of the economy either by direct participation in business or by acting as a catalyst.  The public sector would build up infrastructure for other sectors of the economy and invest in key areas.  The private sector was unwilling to invest in projects which required heavy investment and had long gestation periods.  The government then took it upon itself to develop infrastructural facilities and provide for goods and services essential for the economy. The Indian economy is in a stage of transition. The Five Year Plans in the initial stages of development gave lot of importance to the public sector.  In the post-1990s, the new economic policies, emphasised on liberalisation, privatisation and globalisation. Therole of public sector was redefined.  It was not supposed to play a passive role but to actively pa

GLOBAL ENTERPRISES At some time you must have come across products produced by Multi National Corporations (MNCs).  In the last 2 decades or so. MNCs have played an important role in the Indian economy.  They have become a common feature of most developing economies in the world.  MNCs as is evident from what we see around us, are gigantic corporations which have their operations in a number of countries.  They are characterised by their huge size, large number of products, advanced technology, marketing strategies and network of operations all over the world.  Global enterprises thus are huge industrial organisations which extend their industrial and marketing operations through a network of their branches in several countries. These enterprises operate in several areas producing multiple products with their business strategy extending over a number of countries.  They do not aim at maximising profits from one or two products but instead spread their branches all over. Fea

Government Company A government company is established under The Companies Act, 2013 and is registered and governed by the provisions of The Act.  These are established for purely business purposes and in true spirit compete with companies in the private sector. According to the section 2(45) of the Companies Act 2013, a government company means any company in which not less than 51 per cent of the paid up capital is held by the central government, or by any state government or partly by Central government and partly by one or more State governments and includes a company which is a subsidiary of a government company.  Under the Companies Act 2013, there is no change in the definition of a company. All provisions of the Act are applicable to government companies unless otherwise specified.  A government company may be formed as a private limited company or a public limited company. There are certain provisions which are applicable to the appointment/retirement of directors

Departmental Undertaking : This is the oldest and most traditional form of organising public enterprises.  These enterprises are established as departments of the ministry and are considered part or an extension of the ministry itself.  The Government functions through these departments and the activities performed by them are an integral part of the functioning of the government.  They have not been constituted as autonomous or independent institutions and as such are not independent legal entities.  They act through the officers of  the Government and its employees are Government employees.  These undertakings may be under the central or the state government and the rules of central/state government  are applicable.  Examples of these undertakings are railways and post and telegraph department. Features : The main characteristics of Departmental undertakings are as follows: (i) The funding of these enterprises come directly from the Government Treasury and are an annu

JOINT VENTURES Business organisations as you have studied earlier can be of various types private or government owned or global enterprises.  Now, any business organisation if it so desires can join hands with another business organisation for mutual benefit. These two organisations may be private, government-owned or a foreign company.  When two businesses agree to join together for a common purpose and mutual benefit, it gives rise to a joint venture.  Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short term projects.  A joint venture can be flexible depending upon the party's requirements.  These need to be clearly stated in a joint venture agreement to avoid conflict at a later stage. A joint venture may also be the result of an agreement between two businesses in different countries.  In this case, there are certain provisions provided by the governments of the two countries, which will have to be adhered to. Thus, we