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Friday, February 06, 2015

Public Sector Public Relations (Unit 15, B IV, C 8 for MA Masscom & PR) - Draft



15.0   Objectives
15.1   Introduction

15.2   Concept of Public Sector
          15.2.1                   Public Sector Unit’s Objectives       
          15.2.2                   Policy announcement of Public Sector units
          15.2.3                   Types of Public Sector Units
15.3   Public Sector and Public Accountability                       
          15.3.1                   Concept of Memorandum of Understanding
          15.3.2                   Disinvestment policy
          15.3.3                   Interaction with Public Sector Forum
          15.3.4                   Global competition
          15.3.5                   Corporate Social Responsibility
          15.3.6                   Company Act

15.4   Organizational structure of Public Sector
          15.4.1                   Management levels & Departments
  15.4.2                   Personnel Management
          15.4.3                   Work culture and Ethics in Public Sector Units

15.5   Public Relations structure in Public Sectors
          15.5.1                   Functions of Public Relations
          15.5.2                   Internal & External PR Process
         15.5.3                   Specialized Role of Public Relations in Public Sector Unit
          15.5.4                   Public Relations person in Public Sector
          15.5.5                   Concern for environment
          15.5.6                   Public Sector Unit image

15.6   Public Relations in Major Public Sector undertakings
          15.6.1                   BHEL
          15.6.2                   Indian Oil Corporation

15.7   Summary
15.8   Model Examination Questions
15.9   Glossary
15.10 References

After reading the unit, you will be able to -

· Explain the objectives, policies, role and responsibilities of Public Sector Unit.
· Describe the concept of Public Sector, types of public sector units and their organizational structure
· Explain  public accountability, disinvestment policy and global competition of a public sector
· Analyze the specialized role of Public Relations in a Public Sector
· Define the tasks involved in undertaking an effective PR campaign for a Public Sector.

After the Independence, India started her quest for an overall industrial development. The Industrial Policy Resolution of 1948 made a beginning of the evolution of Indian Industrial Growth. This resolution had outlined the role of the State in industrial development both as an Entrepreneur and as a controller. This approach was a right step to build the economy of the country particularly the infrastructural base, which is so essential for industrial growth. India was also able to develop heavy industries during this period.  The Industrial Policy Resolution of 1956 gave further impetus to the public sector in the Indian economy which envisaged mixed economy where both public and private sectors could progress hand in hand. Nationalization of General Insurance Companies in 1956 and of Banks in 1969 and the mixed economy policy led to the growth of public sector in Central and State Governments. Thus, successive policy resolutions reiterated the basic tilt in favor of the public sector. During the eventful 67 years of our independence, the Public Sector enterprises have been playing a key role to strengthen Indian economy.

The basic concept of public sector is to provide suitable conditions for agricultural, industrial, economic growth and development. Public Sector Undertakings or Corporations are constituted either under Central or State Legislature as the case may be. Thus they are broadly divided into two categories: Central Public Sector Enterprises and State level Public Enterprises. The huge investment and the pivotal role of PSUs call for public and social accountability. Disinvestment policy or micro privatization refers to accepting public investment from markets by way of selling shares thus keeping a substantial amount of funds in Government investment.  With the 1991 economic policy of Liberalization, Privatization and Globalization there was a sudden shift of focus to profitability. This led to reduction in workforce. Thus the PSUs had to face competition with their equals globally and also with private sector enterprises, locally. Structurally, every PSU will have 3 levels of management viz Top Management, Middle level Management and Subordinate level executives. Broadly there will be mainly 4 Departments namely Finance, Production, Marketing and Public Relations in every Enterprise, but PR plays a pivotal role due to its functions as mouthpiece and antennae in dissemination of information and handling both internal and external communication.
Public Sector Undertaking is defined as a “legal entity created by the Government but exterior to Government organization, functionally and financially independent for carrying on specific activities prescribed in the law creating it”. Thus, the term public sector is generally to refer to Government owned enterprises. It is also defined as “a Corporate body created by public authority, with defined powers and functions and financially independent.  It is administered by a Board appointed by the public authority to which it is answerable.  Its capital structure and financial operations are similar to those of public company, but stock holders retain no quality of interest and are deprived of voting rights and power of appoint of the Board”.

As stated earlier, when our country became independent, our planners chose to adopt the concept of mixed economy to ensure all round social benefits.  What is mixed economy?  It is the existence of private and public sectors side by side.  The ownership of public sector units rests with the Government while the ownership of enterprises in private sector rests with private persons. The basic concept of public sector is to provide suitable conditions for agricultural, industrial, economic growth and development.

15.2.1    Public Sector Unit’s Objectives

The Public Sector was launched to check the concentration of wealth in the hands of a few capitalists and to maintain a balanced economic development. Other objectives are -


    Adopting strategic options for implementing the national objective of creating a socialistic pattern of society and adopting modern technology to increase production;
·  Achieving organizational excellence as a model employer and achieving self-reliance in critical areas of defense and development;
·   Providing massive employment opportunities and ensuring workers’ participation in management;
·   Generating internal resources in re-investment and fulfilling social responsibilities

15.2.2    Policy announcements of Public Sector units

            As stated earlier, in 1948, the Industrial Policy Resolution accepted the concept of mixed economy and divided the industrial sector into four broad categories

1. The first category included strategic industries like defense, arms and ammunition, atomic energy, river valley projects and railways.
2. The second category was reserved for basic and key industries like Coal, Iron and Steel, Aircraft, Ship Building, Communication equipment and mineral oils
3. The third category included important industries like cotton, textiles, sugar etc. These industries although private were subject to State control.
4.  The remaining industries were reserved for private enterprises.

In 1956 the Industrial Policy Resolution gave further impetus to the public sector by bringing industries of basic importance under its purview.  With the report of the Parliamentary Committee on Public Undertakings, the scope of the Public Sector expanded into the area of consumer articles too. This resolution was a landmark policy statement and it formed the basis of subsequent policy announcements.   

Industrial Policy Measures of 1960s and 1970s led to setting up Monopolies Inquiry Commission (MIC) to review various aspects pertaining to concentration of economic power and operations of industrial licensing under the IDR Act, 1951. While emphasizing that the planned economy contributed to the growth of industry, the Report by MIC concluded that the industrial licensing system enabled big business houses to obtain disproportionately large share of licenses which had led to pre-emption and foreclosure of capacity. Subsequently, the Industrial Licensing Policy Inquiry Committee (Dutt Committee), constituted in 1967, recommended that larger industrial houses should be given licenses only for setting up industry in core and heavy investment sectors, thereby necessitating reorientation of industrial licensing policy.

In 1969, the monopolies and restrictive Trade Practices (MRTP) Act was introduced to enable the Government to effectively control concentration of economic power. The Dutt Committee had defined large business houses as those with assets of more than Rs.350 million. The MRTP Act, 1969 defined large business houses as those with assets of Rs.200 million and above. Large industries were designated as MRTP companies and were eligible to participate in industries that were not reserved for the Government or the Small scale sector.

As per the Industrial Policy Statement 1973, the preference has gone to small and medium entrepreneurs over the large houses and foreign companies in setting up of new capacity particularly in the production of mass consumption goods with a view to prevent excessive concentration of industrial activity in the large industrial houses. Undertakings of up to Rs.10 million by way of fixed assets were exempted from licensing requirements for substantial expansion of assets. This exemption was not allowed to MRTP companies, foreign companies and existing licensed or registered undertakings having fixed assets of Rs.50 million and above.

In the Industrial Policy Statement 1977, the principal thrust was on the development of small industries i.e. effective promotion of cottage and small scale industries.

The industrial Policy Statement of 1980 placed accent on promotion of competition in the domestic market, technological up-gradation and modernization of industries. Some of the socio-economic objectives spelt out in the Statement were i) optimum utilization of installed capacity, ii) higher productivity, iii) higher employment levels, iv) removal of regional disparities, v) strengthening of agricultural base, vi) promotion of export oriented industries and vi) consumer protection against high prices and poor quality. Policy measures were announced to revive the efficiency of public sector undertakings (PSUs) by developing the management cadres in functional fields viz., operations, finance, marketing and information system. An automatic expansion of capacity up to five per cent per annum was allowed, particularly in the core sector and in industries with long-term export potential. Special incentives were granted to industrial units which were engaged in industrial processes and technologies aiming at optimum utilization of energy and the exploitation of alternative sources of energy. In order to boost the development of small scale industries, the investment limit was raised to Rs.2 million in small scale units and Rs.2.5 million in ancillary units. In the case of tiny units, investment limit was raised to Rs.0.2 million.

            With the introduction of Industrial Policy 1991 substantial programme of deregulation has been undertaken. The policy admitted that Governmental interference through MRTP had retarded industrial growth. Industrial licensing had been abolished for all projects except for a short list of 15 industries related to security, strategic or environmental concerns. They are coal and lignite, petroleum [other than crude] electronic aerospace and defense equipment, industrial explosives including detonative fuse etc. A significant number of industries had earlier been reserved for the public sector. Now, no manufacturing sector is so reserved except for petroleum and defense equipment. The areas reserved for the public sector are: Arms and ammunition; defense aircrafts and warships; atomic energy; railway transport. Even in these areas private sector participation can be invited on a discretionary basis. The public Sector now is facing competitive environment both from Indian and foreign industries. This new Industrial Policy sought to drastically liberalize the economy and redefine the role of the Public Sector.  This was done to free the Indian economy from unnecessary bureaucratic controls. Key industrial activities like power, telecommunication, steel etc are open to the private sector.  For PSUs, this policy ushered increased management freedom, greater productivity, market-friendly approach and a new work culture.

15.2.3    Types of Public Sector Units

Public Sector Undertakings or Corporations are constituted either under Central or State Legislature as the case may be.

Thus they are broadly divided into two categories: Central Public Sector Enterprises and State level Public Enterprises.  In 1951, the public sector had only five enterprises with a total investment of just Rs.29 crores. The number rose to 249 Central PSEs providing employment to more than 21 lakh individuals. Out of these 249 PSUs, 217 were in operation till 2010. 10 have been privatized recently. There are about 1100 State Level Public Enterprises constituted by different State Governments.

The growth of CPSEs and their investment
No of Units
Investment (in crores)

Source: Public Enterprises Survey 2009-10
These enterprises could be further divided into manufacturing units, such as Steel, Minerals, Metals etc and those rendering services in trading, marketing, transportation, construction, industrial development etc.

Broadly speaking public enterprises are of four types:

1.      Enterprises under a system of price control: When prices are fixed by the government as a result of conscious national policy and applied in equal measure to all units in public sectors.  Here the profitability of an enterprise depends upon productive efficiency. For e.g. Fertilizer Corporation of India, Indian Oil Corporation, Cement Corporation of India etc

2.      Enterprises selling the entire products to Central Government: For e.g. Hindustan Aeronautics Limited, Indian Telephone Industries Ltd., Hindustan Cables Ltd.

3.      Enterprises whose products are sold to State Government Enterprises or to its own branches: For eg. Bharat Heavy Electricals Limited for steel plants.

4.      Enterprises whose products are sold in international market: For e.g. Shipping Corporation, State Trading Corporation, Steel Authority of India Limited etc


The huge investment and the pivotal role of PSUs call for public and social accountability.  With the expanded role of the public sector for the development of the country and due to the pursuance of a number of objectives by them, some of which are mutually conflicting, no single yardstick can be applied for measuring their performance.

15.3.1    Concept of Memorandum of Understanding
The concept of Memorandum of Understanding (MoU) was evolved to overcome the difficulty of social accountability.  Memorandum of Understanding is therefore a contract signed between the public sector and its administrative ministry.  It specifies obligations of the PSU, its targets and the Government’s role, such as expediting policy clearance, release of foreign exchange, financial aid and delegation of powers.  This contract leaves the PSU functionally autonomous and more accountable.  Memorandum of Understanding spells out:

Ø  Mission and objectives of the Public Sector unit
Ø  Targets of the Organisation
Ø  Strategies for accomplishing them
Ø  Criteria for performance evaluation
Ø  Obligations of the Government
Ø  Detailed plans for periodic review of performance
Ø  Readjustment of strategies and targets if necessary.

Since every PSU has different objectives and targets for e.g. for a manufacturing enterprise, evaluation targets will be different from that of a trading one; or a loss making organisation’s strategies will be different from a profit making organisation’s: It becomes necessary for each MOU to have a different frame work.  The final MoU is a result of careful scrutiny by the Department of Public Enterprises, Adhoc Task Force (ATF), 3rd Party evaluation and finally the high-power committee (headed by the Cabinet Secretary)

15.3.2    Disinvestment policy

Disinvestment policy or micro privatization refers to accepting public investment from markets by way of selling shares thus keeping a substantial amount of funds in Government investment.  Public enterprises are disposed of by public sale of shares.  This process of disinvestment is expected to

· Generate additional funds from public/market sources thus relieving the Government from financial burden
·   Be more accountable to the public and also to the share holders. It should lead to competitive selling and marketing
·   Improve productivity and profitability
·  Generate profits by improving quality of products and increasing customers’ satisfaction.

15.3.3    Interaction with Public Sector Forum

Apart from the Government control or the public sector organization, there is DPE (Department of Public Enterprises) which is coordination and evaluating enterprise for the public sector.  It appraises performance, encourages coordination and renders expert advice to the public enterprises.  Another forum is SCOPE (Standing Conference on Public Enterprises) set up in 1970, which is the unofficial organization of a public sector undertaking.  The SCOPE is an effective consultation forum for central public sector enterprises.  In addition to this, is the parliamentary control through COPU (Parliamentary Committee on Public Undertakings) which was set up in 1964 and comprises of 22 members 15 from the Lok Sabha and 7 from the Rajya Sabha. These Public Sector Fora organize periodical seminars and conferences to evaluate the activities and assist the PSUs in improving their total performance.

The public sector functions within the rules and regulations prescribed by the Government and are thus subject to more public scrutiny than the private sector.  It is against these facts that a public sector has to promote its image while preserving its commitment to the Government rules.

15.3.4    Present scenario in Global competition

Global competition: Competitiveness refers to the ability of an entity to operate efficiently and productively in relation to other similar entities. Competitiveness could be of a company, a group of companies or nations.  Competitiveness has been used most recently to describe the overall economic performance of a nation, particularly its level of productivity, its ability to export its goods and services, and its maintenance of a high standard of living for its citizens. Globalization has brought new opportunities to the industry and firms. Simultaneously it has also brought new threats to many industries and firms. Many of the enterprises have made attempts to survive in the changed environment. Most of the efforts have been implicit, informal, diffused and hence less effective. The dynamics of the new economic milieu provide that only competitive firms may finally survive and the non-competitive firms may disappear.

PSUs or CPSUs are also called as CPSEs [Central Public Sector Enterprises] as explained earlier. The term ‘Industry’ is also referred to as ‘Enterprise’. The public sector no longer enjoys monopoly.  In the era of economic liberalization (1991), Public Sector Undertakings had to face new challenges such as competition with multinationals, globalization of market, technological up gradation, high productivity with reduction in cost of production, improvement in communication with stakeholders, customers’ satisfaction.  As a result, there has been an upswing in communication activities of public sector to meet the growing competitive marketing environment. Thus, invariably, the PSUs had to face competition with their equals globally and also with private sector enterprises, locally.

15.3.5  Corporate Social Responsibility
Corporate social responsibility is the responsibility of a Corporate towards the Community, Society and the Environment at large. It is also called corporate conscience, corporate citizenship or sustainable responsible business/ Responsible Business. CSR policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and international norms. With some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law. CSR aims to embrace responsibility for corporate actions and to encourage a positive impact on the environment and stakeholders including consumers, employees, investors, communities, and others. The term "corporate social responsibility" became popular in the 1960s and has remained a term used indiscriminately by many to cover legal and moral responsibility more narrowly construed.  
Political sociologists became interested in CSR in the context of theories of globalizationneoliberalism and late capitalism. Some sociologists viewed CSR as a form of capitalist legitimacy and in particular point out that what began as a social movement against uninhibited corporate power was transformed by corporations into a 'business model' and a 'risk management' device, often with questionable results. CSR is titled to aid an organization's mission as well as a guide to what the company stands for to its consumers. Business ethics is the part of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR.

15.3.6  Company Act

The Ministry of Corporate Affairs, Government of India has recently notified the Section 135 of the Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 which makes it mandatory (with effect from 1st April, 2014) for certain companies who fulfill the criteria as mentioned under Sub Section 1 of Section 135 to comply with the provisions relevant to Corporate Social Responsibility. Now, CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good. Socially responsible companies do not limit themselves to using resources to engage in activities that increase only their profits. They use CSR to integrate economic, environmental and social objectives with the company's operations and growth.
The following activities can be undertaken by the Companies as a part of their CSR initiatives.

The companies having Networth of INR 500 crore or more; or Turnover of INR 1000 crore or more; or Net Profit of INR 5 crore or more during any financial year shall be required to spend 2% of the net profit on CSR activities.


            The usual organizational structure of a major PSU is as given below. This is the flow chart of authority/hierarchy available with BHEL.

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15.4.1  Management levels & Departments

            However, a typical public sector enterprise will have the following:

            At the top management level:

a)      The Board of Directors
b)      Chief Executive Officer or Chairman/Managing Director
c)      Chief Financial Officer
d)     Production Manager and
e)      Personnel Director

In the middle management

a)      Production Planning Director
b)      Sales Director
c)      Regional Sales Manager and
d)     Public Relations Manager

            and in the subordinate level

a)      Marketing Executives
b)      Supervisor of the Industry
c)      Training Officer
d)     Controller
e)      Treasurer
f)       Accountant and
g)      Other Staff

Mainly, there are four departments with different functions.  They are –

Finance Department: It is custodian of the Company’s money. It estimates costs and projects profits

Production Department: This sets targets for production, reviews for production vis a vis targets, locates possible flaws and evolves measures for optimum utilization of capacity      

Marketing Department: This looks after the sales of products or services and makes marketing decisions. This department must have the vision to cope with the ever changing market conditions.

Public Relations Department: This projects the public sector in a correct perspective to its various publics.  It helps to foster good inter-personnel relations between different departments within the organisation.  All these departments must        function in close coordination so as to create a winning team and to generate a good work culture.

15.4.2    Personnel Management

“Personnel Management is an integral part of the management process”. What is personnel management? Simply stated, it is managing the Personnel.  ‘Personnel’ is a word of French origin meaning the ‘staff’ or ‘people’ working/employed in any service.  This is the plural of ‘personal’ so to say.  Well, the purpose of ‘Personnel Management’ is getting the best returns from an organization’s investment on its employees.  The functions include:

·         supply of expert and up-to-date advice
·         interpretation and support on managing people
·         provision of expert recruitment support
·         training to the employees
·         job evaluation
·         framework for assessing staff performance
·         consistent development and implementation of remuneration and benefit           policies
·         provision of social benefit schemes to employees
·         solving disputes of legal or financial nature between the employees and             management

15.4.3 Work culture and Ethics in Public Sector Unit

Work culture can be defined as the prevailing attitude and perception that employees have of the organisation in which they are working.  Workers can function best, in a conducive work culture which is possible if the organisation:

1.      Has a confident and trust-worthy management
2.      Has a participative style of functioning
3.      Is quick and efficient in decision making
4.      Keeps philanthropic missions in perspective while taking any decision
5.      Is autonomous and gives adequate responsibilities to its workers
6.      Has risk-taking capabilities

Among the various factors that have been identified as bottlenecks in the effective functioning of PSUs is the formation of the Trade Unions on militant lines.  Another is the poor work culture of employees and lack of responsibility on the part of the management.  A strong need has been felt, to make the employees change their approach to work, for which, management have a responsibility.  As a result, a new work culture is emerging in Public Sector Units.  It has led to a constant dialogue between PSU management and its employees for minimizing wage disparities, working towards productivity etc.

The incentives, bonus, rewards and suggestion schemes have paved the way for better motivation and morale. It is here that PR effort has to ensure interaction from shop floor level to the Board room to facilitate a participative management style.  To inform, to motivate and to instill commitment to the organisation, communication links with the employees have to be established using a variety of media like house journals, booklets, manuals, circulars, bulletin boards, direct mail, lectures, meetings with trade union leaders, direct interaction with supervisors, films etc

"Public Relations is a strategic communication process that builds mutually beneficial relationships between organizations and their publics." “Public Relations is the way organizations, companies and individuals communicate with the public and media”. “Public Relations is the management function that establishes and maintains mutually beneficial relationships between an organization and the publics”. While Public Relations stand thus, the basic objective of public sector is to provide suitable conditions for agricultural, industrial, economic growth and development. In order to realize this objective, public sector corporates have to establish and maintain relations with various segments of targeted public. Thus practice of Public Relations is an important task in Public Sector.

Critics say that the public sector was launched in the country without properly defining its basic concept.  Its performance was measured by its immediate profitability.  Hence, it came to acquire a negative image right from the start.  The under-utilization of capacity, excess staffing, large gestation period and lack of professionalism are some of the ills pointed out by the media.  In short, public sector, in the eyes of the common man was synonymous with inefficient production and a loss-making organization. Whatever is the criticism; Public Sector units exist for public good and are not run on commercial lines.  Therefore, it is a challenging role for the PR setup in the Public Sector to counter the negative aspects and public criticism.  PR person, instead, project its socially responsible role to promote the faith of the people in Public Sector.

The PR structure in a Public Sector Bank is as follows: (e.g. State Bank of India)

15.5.1  Functions of Public Relations

Whatever is the organizational structure and the PR set up, the functions of Public Relations in a Public Sector are :

Employee Relations
Dealing and communicating with the employees of an organization. This can include team building and employee empowerment.

Shareholders’ relations
Dealing and communicating with the shareholders of the organization. This include editing and production of corporate literature

Customers’ relations
Dealing and communicating with the customers that consume/avail the goods / services of the public sector undertaking.

Community Relations
Active and continuing participation with and within a community to maintain and enhance its environment to the benefit of both the organization and the community. This can involve partnerships, volunteer activities, philanthropic contributions and public participation.

Government Relations
Dealing and communicating with legislatures and government agencies on behalf of the organization.

Financial Relations
Dealing and communicating with firms and interest groups within the organization’s industry.

Communication about environmental protection
Educating the society on environmental protection through various methods and the media

Promotion of reputation
Design and run a communication campaign that promote the reputation of the public sector

Corporate advertising
Drawing attention of all the concerned towards the social objective as well as economic objective of the public sector

Management of crisis communication
Handle the internal vis a vis external communication and also dealing and communicating with the Media

Media Relations
Dealing and communicating with the news media when seeking publicity or responding to reporters’ questions. It also involves setting up and maintaining a professional and mutually beneficial working relationship with news gatherers and gatekeepers, in part by becoming known as a credible source and as a provider of factual, expert information whether or not that information results in media coverage. This also includes media monitoring and feedback information management

Public Affairs
Dealing and communicating with government and groups with regard to societal (public) policies, action and legislation. Unlike government relations, where the practitioner works strictly on behalf of an organization, public affairs also is concerned with the effect of public policies, actions and legislation on its publics.

15.2.2    Internal and External PR process              

A.    Internal Public of Public Relations: Internal publics are people employed by a firm or members of an organization and they are intimately related with the functioning of the organization. Internal public relations is a special PR discipline which concentrates on enhancing companies relationships with the employees by facilitating good communication among the management and the employees, boosting their morale and giving them the right information at the right time. Internal Public of Public Relations includes Shareholders or Investors, Employees, Suppliers, Distributors, Retailers/ Dealers and Other business associations

Shareholders/owners/investors relations
Shareholder is the legal owner of the company. He provides finances to the company either as shareholder or as a long-term or short-term creditor. They are entitled to dividend, rights shares, bonus shares, discount coupons for purchase of companies’ products or concessional usage of its services and gifts on special occasions like annual conference, anniversary or celebration. Shareholders deserve fair treatment, get statutory information, transfer of shares to them, information on change of address or non-receipt of dividend.

Employees Relations
Employees are the hands and feet of the company. It is through them that the company fulfills its objectives. It needs their cooperation and understanding on a continuous basis in all its activities including the public relations activities. The principle of self-respect, self-determination and self-judgment are to be applied when dealing with employees. If the company is able to communicate well with the employees and seek their participation and cooperation, they can act as the best public relations agents of the company while dealing with their friends, relations, neighbors, and business associates.

Suppliers Relations
Suppliers are the business associates of the company who provide all types of raw material for the business activities of the company. Suppliers have a direct and crucial role in the functioning and profitability of the company. They have to supply the right quality and quantity of materials for the company. Suppliers need the company and the company need the suppliers. A good company cannot be happy if its suppliers are not happy because they are its business associates and they also have to make profit.

Distributors/Dealers/Retailers Relations
“Distributors are the face of the company”. They are the link between the company and its dealers. The success of the business of a company heavily depends on the performance of the distributors/ dealers, more so in Indian economy where the knowledge of the consumer about the company and its product is relatively poor. Retailer/Distributers/ Traders are the friend, philosopher, and guide of the customers or clients.

B.     External Public of Public Relations: External publics are people and organizations that are clients doing business with a firm or agency or company. The subject matter of External Publics is that it concentrates on issues pertaining the values, policies, procedures and attitude of the company towards various groups of people in society. External Publics of Public Relations includes Consumers/Customers, Community, Mass Media, Government, Financial Institutions, Action Groups and General Publics

Customer is the centre of today’s business activity. A consumer is a person who purchases goods and services for personal use. An External PR needs to educate the audience pertaining the product or about the organization and then get the suggestions of the audience. Present era of management belongs to marketing where every happening in the company revolves around the customer. Mahatma Gandhi , the father our nation,  a very simplistic man in his lifestyle and who does not involve much in business yet understood the important of customers deeply. He said, “A customer or consumer is not a means of business, but he is the purpose of business. He is not an intruder on our premises, he is our quest. He is the last inspector of our quality and he is always right”.

Community Relations
Looking after and protecting the interest of the community is the essence of community relations. Community represents that public which stays in the close vicinity of the company, its office, plants and godown, warehouse etc. Therefore it becomes a social and moral obligation of the industry to compensate community for these losses by making its humble contribution. In gratitude to public companies need to provide various types of services like education service, sewage and sanitation facilities, employment facilities and  health services and others.

Media Relations
Mass media gives mass exposure to company’s activity. It includes Print Media and Electronic Media. With the improvement in transportation system, technology and increase in the literacy rate, newspapers, magazines, story books, comics, weekly newspapers, Radio, TV, and Internet are becoming more and more popular. Mass media have always remained a very strong source of voicing opinion, building propaganda and influencing masses.

Government Relations
The purpose of the relationship with government seems to be disappearing because of vested interest of Individual or corporate.  From the point of view of public relations government and its machinery can be divided into two categories depending on their characteristics. i.e. peoples representatives and bureaucrats. The public relation professionals will have to ensure that without hurting the feelings of either of them and equally balancing their relationship with them, they have to pursue the objectives of their company, department and the profession.

Relationship with Financial Institutions
“Finance is the life blood of business”. Financial institutions have very important role in all commercial transactions of the company, commencement of business, its expansion and growth and even in retardation.  Visit site and plant of the company, giving details of their projects, technical and financial collaboration and market projection helps the financial institutions to understand the company’s plan better and thus gain more confidence. Timely submission of progress reports, payment of principal and interest amount and keeping financial institution abreast with the latest relevant information further helps the company to strengthen its credibility and goodwill with financial institution.

Relations with Action Groups
Action Group is a group of people that work together to try to achieve changes relating to a particular situation or in order to help a particular group of people. The enactment of Consumer Protection Act, 1986, and the framing of the rules in 1987 have been a major milestone in the role of Action group.  It is small in number but very high in terms of their potential in building or exposing malpractices or inflict setback to the image and reputation of the company.

Relationship with General Public
General public is the ultimate judge of all the activities of the company, based on which it will survive or die. They are the largest of all the external publics of a company and probably the most tolerant of all the public’s. Interaction with general public is through Radio, Television, exhibitions, banners, hoardings, leaflets etc. is very important because they are the ones who will buy the product of the company.

15.5.3  Specialized Role of Public Relations in Public Sector Unit

It is against the above mentioned backdrop that we must examine the role of public relations in the Indian Public Sector.  The PR activity has the function of projecting the other, less known, but positive macro image of the public sector that it

·         Contributes to national economy
·         Is it profitable and productive core sector
·         Has social commitment
·         Contributes to revival of sick units
·         Is self-reliant in the key sector of economy

In addition the individual enterprises activity must also be highlighted about the policies, programmes, targets, capacity utilization, achievements and socially beneficial schemes.  These facts can be used to counter any adverse criticisms and they influence public opinion in favor of public sector enterprises.

15.5.4    Public Relations person in Public Sector

The PR person must be a dedicated professional who is well aware of the concept of the public sector. He/She must have direct access to the Chief Executive, attend all meetings and be fully involved in the task of creating understanding between the enterprise and public.  He/She has, therefore, to be a skilled communicator, besides having a good grasp of publicity techniques.

It is his efforts that can keep the Trade Union in touch with the management and ensure harmony.  Communicating with the Press and the public both internal and external is important.  The responsibilities include issuing of press releases arranging press conferences, writing articles, institutional advertising, supervising photography, arranging press visits, recording and filing all press cuttings to evaluate media coverage.  The PR person being the source of information must also answer queries, telephonic or in person, make speeches, arrange visual aids, exhibits, slides and also be responsible for the company’s internal and external publications like house journals, pamphlets, annual reports, brochures etc.

15.5.5    Concern for environment

In addition to social welfare issues, environment protection has acquired importance for any organisation.  Social and political pressures are put on PSUs to recognize their obligations and act in a socially responsible manner.  They need to be sensitive to the environment as the general publics are more educated, have broader perception and have become more environment conscious.

The public and media attention was very recently focused on the damage caused to the environment by chemical gases emitted by some factories.  The damage to the Taj Mahal by noxious gases from Mathura Refineries has not been forgiven by the people. CFC (Chlorofluoro Carbons) which is used in aerosols, refrigerators, air conditioners, plastic foam etc is seen as a potential danger to the Earth’s ozone layer.  Every organisation has to have regard for the environment and take adequate precautionary measures to avoid any possible ecological damages.  Adequate steps taken by an organisation for environment protection include:

·         Effective discharge channels for effluents
·         Proper treatment of toxic gases
·         Water and air purifying installations
·         Recycling of industrial waste
·         Prevention of all types of pollution
·         Periodic audits to ensure efficient and pollution-free functioning

15.5.6    Image of a Public Sector Unit

Public Sector for Public Good: Although public sector units have been criticized for some lapses, the PR person in the public sector has a lot to say in its defense by promoting positive aspects.  Public sector has assumed great importance in its role of fulfilling a social need.  It provides employment and takes care of its employees by providing subsidized education, canteen, water, electricity and other welfare services.  Besides, it plays a socially responsible role by preventing concentration of wealth in a few hands alone.  The PR campaigns can highlight this role of public sector for Public Good.

There is also a need to develop a good image.  What is this image?  How is it acquired and sustained by a Public Sector Unit?

A Public Sector Unit, as we know, deals with several publics.  In course of its dealings, the public like employees, dealers, suppliers, media, community leaders come to acquire a certain impression of the organisation in their minds.  The way the various publics’ view the organisation, becomes the corporate image.  Hence, every corporation has to worry about its multifaceted image or the total image.  This is not at all an easy task.

Further, a company is evaluated not only by its financial performances but also on other factors like its treatment of its employees, its philanthropy, general public welfare etc.  However, performance is very important.  Publicity can only follow performance. Institutional advertisements greatly contribute to image-building.  


15.6.1    BHEL

BHEL was established in 1964. Heavy Electricals (India) Limited was merged with BHEL in 1974. In 1982, it entered into power equipments, to reduce its dependence on the power sector. It developed the capability to produce a variety of electrical, electronic and mechanical equipments for all sectors, including transmission, transportation, oil and gas and other allied industries. In 1991, it was converted into a public limited company. By the end of 1996, the company had handed over 100 Electric Locomotives to Indian Railway and installed 250 Hydro-sets across India. Embarking upon the 50th Golden Year of its journey of engineering excellence, BHEL is an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing company of its kind in India engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation (Railway), Renewable Energy, Oil & Gas and Defence with over 180 products offerings to meet the needs of these sectors.

Establishment of BHEL in 1964 was a breakthrough for upsurge in India’s Heavy Electrical Equipment industry. Consistent performance in a highly competitive environment enabled BHEL attain the coveted ‘Maharatna’ status in 2013. BHEL as a part of Pt. Jawaharlal Nehru’s vision was bestowed with the onus to make the country self-reliant in manufacturing of heavy electrical equipment. Today, with 20,000 MW per annum capacity for power plant equipment manufacturing, BHEL’s mammoth size of operations is evident from its widespread

With a widespread network of 17 manufacturing units, 2 repair units, 4 regional offices, 8 service centers, 8 overseas offices, 15 regional centers, 7 joint ventures, and infrastructure to execute more than 150 project sites across India and abroad, BHEL provides products, systems and services to customers efficiently and at competitive prices. The company has established capability to deliver 20,000 MW p.a. of power equipment to address the growing demand for power generation equipment. 

BHEL has retained its market leadership position during 2013-14 with 72% market share in the Power Sector, even while operating in a difficult business environment. Improved focus on project execution enabled BHEL record highest ever commissioning/synchronization of 13,452 MW of power plants in domestic and international markets in 2013-14, marking a 30% increase over 2012-13. The company has added more than 1,24,000 MW to the country's installed power generating capacity so far. It also has been exporting its power and industry segment products and services for over 40 years. BHEL's global references are spread across over 76 countries across all the six continents of the world. The cumulative overseas installed capacity of BHEL manufactured power plants exceeds 9,000 MW across 21 countries including Malaysia, Oman, Iraq, UAE, Bhutan, Egypt and New Zealand. Their physical exports range from turnkey projects to after sales services.

PR/Corporate Communication structure in BHEL
Bharat Heavy Electricals Limited has an exclusive corporate communication department headed by an Addl General Manager with the required managerial staff at its corporate office in New Delhi. There is a communication and public relations division at unit level in Bhopal, Hyderabad, Tiruchy, Bangalore offices. Public Relations division is headed by Asst General Manager, Dy General Manager or Senior Dy General Manager as the case may be. Corporate communication department is responsible for policy formulation, budgeting, programme coordination and managing corporate communication activity for BHEL nationally and globally. Unit level communications and public relations divisions take care of this activity in their respective regions with a close link with Corporate office in New Delhi. This set up is also a pace setter for others in public and even in private sector organizations.

CSR activities: Some of the recent CSR activities of BHEL are -
1.     Community Development: ‘Anhad Gram’ in 25 villages of the backward district of Munger in Bihar with 4 objectives - ¢ Dairy development ¢ Bio-mass fuel ¢ Women Health & Hygiene ¢ Food Processing & Preservation Unit.
2.      ‘Technology based advanced agricultural interventions’ in tribal dominated Khargone district for economic empowerment of marginalized farmers through nursery/crop/pest management and post-harvest efforts.
3.     Provided relief and succor to Uttarakhand flood victims by way of food, water, medicines and Mobile Medicare Units.
4.     ‘Adoption of 15 Villages for Sustainable use of rain water harvesting to enhance livelihood of poor small farmers’ in Bijawar block of Chhatarpur District (M.P.)
5.      Supported ‘Construction of tribal welfare school’ at Bhubaneswar Nagar, Assam to provide education facilities to tribal, rural and slum children of the area
6.       Supported a project through NGO ‘DISHA’ to promote education and skill development of disadvantaged children and youth by imparting non-formal education to 1260 street/ slum children including skill training to 240 youth living in 10 slum clusters of Delhi
7.      Continued with vocational training programs viz. ‘Cutting & Tailoring’ and ‘Beauty Culture’ for women from weak economic background thereby providing them with self-employment opportunities
8.    BHEL-FAEA (Foundation for Academic Excellence and Access) Education scholarship programme provided scholarships to 150 BPL candidates.
9.     Provided scholarships to pursue higher education to 100 undergraduate girls from economically weaker sections in Haridwar, Uttarakhand
10.   UDAAN: Provided intensive training of nine months to 87 Engineering Degree & Diploma candidates of J&K at ATI, Chennai,
11.  Sustained Graded Value Education Programmes (SGVEP): BHEL has entered into an agreement with highly esteemed organization R.K. Mission to facilitate their mission of providing value based education to students of Delhi-based schools (Grade VII Grade XI)
12.   Financial support to an NGO named ‘Sane & Enthusiast Volunteers Association of Calcutta’ for construction of a Mental Health Care facility at Thakurpukur, Kolkata.

15.6.3    Indian Oil Corporation

Indian Oil Corporation Limited, or Indian Oil, is the country’s flagship national oil company and highest ranked (96th) Indian corporate in the prestigious Fortune ‘Global 500’ listing in the year 2014 and the largest public corporation in India when ranked by revenue. Indian Oil has been meeting the energy needs of the country for more than five decades now. A strong workforce of about 33,800 employees has been instrumental in achieving such glorious milestones.

Indian Oil began operations in 1958 as Indian Oil Company Ltd. The Indian Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd.
The company’s operations are strategically structured along the core business areas viz. Refineries, Pipelines, Marketing, and Research & Development. Additionally, to keep up with the rapid changes in business environment, Business Development group was formed with a mandate to expand the existing portfolio through backward and forward integration such as embarking into Exploration & Production and venturing into Petrochemicals and Natural Gas business. Refineries Indian Oil and its subsidiary company, Chennai Petroleum Corporation Ltd., together own and operate 10 of India’s 22 refineries with a total refining capacity of 65.7 MMTPA accounting for 30.54 percent of country’s refining capacity.

The company is mainly controlled by Government of India which owns approx. 79% shares in the company. Indian Oil is one of the seven Maharatna status companies of India, apart from Coal India Limited, NTPC Limited, Oil and Natural Gas Corporation, Steel Authority of India Limited, Bharat Heavy Electricals Limited and Gas Authority of India Limited.

PR/Corporate Communication structure in IOCL
Indian Oil Corporation Limited has an exclusive corporate communication department headed by an Addl General Manager with the required managerial staff at its corporate office in New Delhi. There is a communication and public relations division at unit level offices. Public Relations division is headed by Asst General Manager, Dy General Manager or Senior Dy General Manager as the case may be. Corporate communication department is responsible for policy formulation, budgeting, programme coordination and managing corporate communication activity for IOCL nationally and globally. Unit level communications and public relations divisions take care of this activity in their respective regions with a close link with Corporate office in New Delhi.

CSR activities: Some of the recent CSR activities of IOCL are -

1.       Indian Oil Sachal Swasthya Seva (ISSS) offers free Mobile Healthcare               Service

2.         Swarna Jayanti Samudaik Hospital, Mathura is a 50-bed Swarna Jayanti Samudaik Hospital established in 1999 to provide medical assistance to residents of nearby areas of Mathura Refinery.

3.         Assam Oil School of Nursing (AOSN), Digboi offers professional nursing/ midwifery courses to unemployed girls of the North East

4.         Indian Oil Education Scholarship Scheme for the poor and deserving SC/ ST students was started in the year 1984-85

5.         Indian Oil Sports Scholarship Scheme has been promoting Sports for over three decades now.

6.         MoU with TATA Medical Centre Trust offer “Health & Medical Care”          in Kolkata

7.         LPG Scheme of Government of India, offered a one-time grant to Below Poverty Line (BPL) families in the rural areas for release of new LPG connection.

8.        Uttarakhand & Odisha Indian Oil contributed 2 crores to Uttrakhand Chief Minister’s Relief Fund for relief and rehabilitation of people affected by floods/cloud burst in Uttrakhand.

9.         Shikshak Dakshyata Vikas Abhiyan to improve soft skills of government school teachers.

10.       Sarve Santu Niramaya provides free health consultation and medicines for both human beings and livestock population.

11.       Drinking water projects near Guwahati with 20 community stand-alone drinking water projects were implemented on cost-sharing basis near Guwahati for 1,211 subscribing households.

12.       Indian Oil Foundation (IOF), a non-profit Trust, was founded to protect, preserve and promote national heritage in collaboration with Archaeological Survey of India (ASI) and National Culture Fund (NCF) of the Government of India.

15.7   SUMMARY

The concept of mixed economy adopted by the nation resulted in the creation of Public Sector in India.  With its ownership resting with the Government, PSUs were set up to act as a catalyst for the overall development in key sectors of the economy.  The objective was to lead the nation towards self reliance, to provide massive employment and transform India into a welfare state.

Subsequent changes in industrial policy helped these units to expand to other areas and compete with the private sector.  Today, public sector in India has a dominant role to play in the nation’s economy.

PSUs have some unique features, chief among them being, their multi-dimensional accountability to the Government, to the Parliament and to the public in general.  The image of PSU has always been negative because of chronic losses, labor disputes etc.  The performance of the public sector has always been under the media focus and hence the public scrutiny has been severe.

Thus against these factors, public relations has a specialized role in promoting employee-management relations to project public sector as a workers’ sector.  Besides, the public relations effort must be directed at projecting the public sector as one for public good and national welfare because of the corporate social responsibility discharged by these units. 

Public image of public sector can be tilted favorable using publicity, organizing visits, participating in community activities and promoting oneself as being conscious of environment and committed to national cause.


I.     Answer the following questions in about 40 lines each

1)     What is meant by Public Sector ? What is its importance in Indian economy and its role in Indian industry?

2)   What is the concept of Public Sector ? Explain the objectives as well as Roles and Responsibilities of a public sector unit.

II.    Answer the following questions in about 20 lines each

1.    Describe the organizational structure in a Public Sector undertaking and define the importance of personnel management in ensuring work culture and ethics.

2.     Describe the role of Public Relations person in a Public Sector undertaking with special reference to Community Relations, Concern for environment and Image building.

Important method of bridging gaps between public demand and organizational performance by a system of checks and balances

Institutional Advertising
Also called ‘prestige’ advertising. It does not attempt to sell any product. Its aim is to create a favorable image of the organisation and is a part of PR activity

An organized effort to poll, formulate or alter the opinion of any group or groups on a selected subject

The adjacent geographical area or population influenced and affected by company policy or production

Corporate Culture
Unwritten sets of values and rules within an organisation that govern the behavior of those belonging to it and associated with it

House Journal
Periodic publication which establishes regular communication between an organization’s employees and its employers

Industrial Policy
Country’s official strategic effort to encourage the development and growth of the manufacturing & servicing sector of the economy.

Memorandum of Understanding. An agreement of contract signed between an organisation and its administrative ministry and specifies the obligations of both parties

It is a status given to 7 major CPSUs: Bharat Heavy Electricals Limited, Coal India Limited, GAIL (India) Limited, Indian Oil Corporation Limited, NTPC Limited, Oil & Natural Gas Corporation Limited & Steel Authority of India Limited are in this category


It is a status given to 72 CPSUs

It is a status given to 17 CPSUs namely Bharat Electronics Limited and 16 others

Public Relations
The science and art of attitude control

Public Sector
Organizations owned primarily by the Government which run on business lines.  These enterprises are set up to build sound infrastructure

Central Public Sector Undertakings or Central Public Sector Enterprises

State Level Public Enterprises


Clarke L. Caywood: The Handbook of Strategic Public Relations & Integrated Communications - Mc Graw Hill

Doug Newsom: This is PR – The realities of Public Relations – Wadsworth, USA

Dr C V Narasimha Reddi: Public Relations & Communication Handbook – CVNPR Foundation

Dr C V Narasimha Reddi: Effective Public Relations & Media Strategy – Prentice Hall of India

IGNOU : Text Book “Public Relations in Government and Industry”

SVU DDE: Text Book “Public Relations Management”

Journal: “Public Relations Voice”- Volume 1; Issue No. 2; Apr–Jun, 1998: Dr CV Narasimha Reddi

Source (web)
INDUSTRIAL POLICY SINCE 1956 article by Dr Narendra Jadhav 

Corporate Social Responsibility:
New Companies Act mandating activities under CSR activities:
Public Relations Specialised functions:
Internal and External public of Public Relations :         
Annual reports of BHEL & IOCl