Question

Q:1 It is a public enterprise established under the Indian Companies Act and conducts business in competition with companies in private sector.
i) Identify the type of public enterprise highlighted above.
ii) What is the minimum investment government has to make in such companies.
iii) In whose name shares of this type of company are purchased.
iv) State any two merits and any one demerit of such type of company.
Q:2 Multinational companies establish themselves in developing countries to enjoy huge profits by selling consumer goods or luxury item. They start business by offering wide variety of goods at a cheaper prices than local retailers offer. But once they are established they increase prices.
Q:3 Identify the type of public sector enterprises in the following statements:
i) RBI and FCI are the examples of this form of enterprise.
ii) It enjoys maximum autonomy in all business decisions.
iii) These are established under an act of Parliament.
iv) Where national security is concerned, this form is most suitable.
v) This enterprise is financed directly from the government treasury.
vi) Indian Railways and Post and Telegraph are the examples of this form of enterprise.
vii) Minimum 51% of the paid up capital is held by the government.
viii) Hindustan Aircrafts is the example of this form of enterprise.
Q:4 Maharashtra Pharmaceuticals Ltd, registered under the companies Act, 1956, was started with a paid up capital of Rs 50,00,000. 40% of this paid up capital is in the hands of private individuals and balance is held by the government of Maharashtra. Maharashtra Pharmaceuticals Ltd belongs to which form of public sector enterprise. State its any two features and any two merits.
Q:5 ABC Ltd is a leading marketing company of soft drinks. Its 32% of total paid up capital is held by Central Government and 21% is by Delhi Government.
i) Identify the type of public sector enterprises in the above statement.
ii) State any four features of such an enterprise.

Answer 1

Dear student,
The solution to your 1st query has been provided below:
1.
a) Government company.
b) 51% of shares must be acquired by government in such type of companies.
c) Usually the shares will be purchased by government through the medium of ministries concerning the area of operation.
d)Merits-1. Quick decision making- decisions are taken fast without unnecessary formalities and procedures. 2. Easy financing- If lack of capital exists it is possible to borrow from public through medium such as public deposits.
Demerits-1. Lack of continuity- If chairpersons/the head of such companies change there will be a change in policies of the company also. This may interrupt the smooth functioning of the company.

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