it is a public enterprise established under indian companies act and conducts business in competition with companies in private sector:a)identify type of public enterprise.b) what is minimum investment govt. has to make in such companies.c) In whose name shares of this type of company are purchased .d)explain any two merits and demerits of such companies
Answers
Answer:
a) Government Company
b) 51 %
c) President of India
d)(1) The main merits of government company are:-
Administrative Autonomy. The government company is relatively free from government and political interference. It can function freely and smoothly under the general vigilance of the government. suitable changer can be introduced whenever needed within the provinces of Companies Act.
Greater Flexibility. The government company is managed , financed and audited just as any other private sector company. It can therefore secure greater flexibility, freedom of operation and quickness of action in running the enterprise.
Efficient Staff. The government companies can have their own rules and regulations regarding their recruitment and remuneration of employees. They can appoint professional and specialised people by offering better services and salary.
Collaboration. The government companies can avail and accommodate managerial skill technical know how or expertise of the private enterprise by conveniently collaborating with it.
(2) The major demerits of government companies are :-
Autonomy on paper only. The freedom and flexibility offered to government company is true theoretically only. In actual practice the government being the major shareholders dictates the terms and get the things done in its own way.
Political Interference. The government companies are treated as the personal property of ministers. The interference of ministers is frequent, The operational policies of the government companies are formed according to the whims and fancies of the ministers .
Board Packed with Government Representatives. The board of directors always try to please the government rather than improving efficiency of the government company.
Suitability. The government company is a suitable form of organisation:
(1) Where government wants to control a company in the private sector, without nationalisms
(2) Where government wsnts to go for a collaboration with private enterprise .
(3) Where the projects require government planning and funds.
Explanation
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