PUBLIC LIMITED COMPANY

Definitions:According to section 3(1) of the company act 1956 Public company means a company which (a)Is not private company (b)Has a minimum paid capital of Rs 5,00,000 or such higher paid capital has may be prescribed and (c)Is a private company which is subsidiary of a company which is not a private company Meaning:A public company may be a company limited by shares,a company limited by guarantee,an unlimited company or government company.

Advantages of Public Company

The public sector undertakings are generally big.So, they are able to undertake big projects which cannot be undertaken by private enterprises. The public sector undertakings are not motivated by profits.They see mainly the interest of the nation. Public sector enterprises contribute to balanced development of the whole nation through proper distribution of income and wealth among people.

Cntd
Public sector enterprises help to reduce inequality in the distribution of income and wealth among people. Public sector enterprises help to abolish private monopoly. In public sector enterprises the interest of the labourers are well protected .

Cntd.

Public sector enterprises facilitate better utilisation of local labour ant local raw materials. Public sector enterprises because of their financial capacity,can contribute to establishment of heavy and strategic industries like iron and steel,petrochemicals ship-buildings.

 Public sector enterprises are a source of revenue to the Government. The profits of profitable public sector enterprises can be used for financing the schemes of economic development. Public sector enterprises are able to ensure longterm planning for future industrial and economic development.

 There is greater scope for better coordination among the industries controlled by the public sector. The largescale operations and unified control implicit in public sector enterprises can help to ensure economy in the working of public sector undertakens. There is better deal to consumers in public sector enterprises.

Disadvantages of Public Company

The sense of involvement is lacking in the working of public sector undertakings.As a result, there is no initiative and drive for better results. The public sector undertakings are not free from political interference.As a result,a change in the Government,generally results in change in the policy of the Government in regard to the public sector enterprises. There are red tapism and corruption in the working of the public sector enterprises.

Cntd.

Public sector enterprises may lead to state monopoly.This would mean that the consumers would lose the right of choice of goods. The mangement of public sector enterprises is generally inefficient.This inefficiency in mangement restricts the scope of development of public sector enterprises.

 There is lack of flexibility in the operations of public sector enterprises.So quick decisions cannot be taken by public sector enterprises on imprtant matters. The rate of return on investment is generally low int the case of public sector enterprises.Further, the retrun of investment is very slow. There is employment of excessive manpowe.As a result, labour is not properly utilised.

 There is under utilisation of plant capacity in the case of public sector enterprises. The overheads are heavy in public sector enterprises.The heavy overheads eat away the small profits made by the public sector enterprises. The overheads are heavy in public sector enterprises.The heavy overheads eat away the small profits made by the public sector enterprises.