The U-Turn

IIPM PUBLICATION

There are several reasons for the U-turn of these PSUs from the verge of bankruptcy. Pre-liberalisation there were hardly any competition for these companies. With no competition as threat and full back up from the government, these companies enjoyed the luxury of being a monopolist over decades, and got used to easy going times and easily earned profits. Over the period, this monopoly led to a lethargic and complacent culture in these PSUs, which finally led them towards their doomsday. But thanks to Prime Minister Dr. Manmohan Singh (Finance Minister at that time) who introduced the policy of LPG (Liberalisation, Privatisation and Globalisation) that revolutionized the corporate India. The opening of the Indian economy proved to be an eye opener for the these organizations, and they realised that to survive in the market they certainly need to change their ways, their culture, their attitude…everything required a whole makeover. And their started the story of a complete revamping of these PSUs which is clearly reflected now in their ever-expanding profits. Of course, it has helped that many PSUs and their bosses have been given a measure of operation autonomy over the last decade or so. As Mehul Mukati, an analyst at Emkayshare points out, “I think that the corporatisation /divestment of PSU’s helps bring in responsibility to the management, and at the same time does give more authority to run these organisations. Yes I think divestment indeed help these organizations”.

Another major factor that has been a major driver of change in these PSUs is the rightsizing of these massively and unnecessarily large organizations. It not only cut down the huge operating costs, but also sent a message to the employees that if they don’t perform they don’t have a place in the organisation. As the GAIL spokesperson says, “The Company while focusing on growth of business has also emphasized on minimizing the costs. This has led to the optimization and increased efficiency in the workforce…”

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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