Maharatna, Navratna and Miniratna PSUs in India

Public sector enterprises or public sector undertakings have been back bone of Indian economy since the time of independence. These public sector undertakings contribution in Indian economy indescribable. These industries are related to power sector ,steel manufacturing ,iron ore and petroleum. Government is also able to earn considerable revenue from these PSUs, to honor their contribution and vest some special power that help and provide greater autonomy to these public sector enterprises in decision making ,government confer to some to these industrial organization.

The PSUs in India have been divided in three categories on the basis of autonomy (and thus status) they enjoy. The three categories are...

Maharatna
Navratna
Miniratna I & II categories

The policy aims to support them by providing greater autonomy to compete in the global market.
In India Vedic verses ‘Ratna’ is denominated as precious gems and precious stones. Symbolically, the terms Maharatnas , Navratnas and Miniratnas are supposed to stand for such contribution of gems and precious stones in the hierarchical order.

1) MAHARATNA SCHEME

Maharatna Scheme was introduced for Central Public Sector Enterprises (CPSEs), with effect from 19th May, 2010, in order to empower mega CPSEs to expand their operations and emerge as global giants. The objective of the scheme is to delegate enhanced powers to the Boards of identified large-sized Navratna CPSEs so as to facilitate expansion of their operations, both in domestic as well as global markets.

Eligibility Criteria for grant of Maharatna status

CPSEs fulfilling the following criteria are eligible to be considered for grant of Maharatna status:

Having Navratna status
Listed on the Indian stock exchange, with a minimum prescribed public shareholding under SEBI regulation
An average annual turnover of more than Rs.20,000 crore during the last three years.
An average annual net worth of more than Rs.10,000 crore during the last three years.
An average annual net profit of more than Rs.2500 crore during the last 3 years.
Significant global presence or international operations.

List of Maharatna Companies (as per available information as on 26 October, 2014)

There are seven public sector companies which were granted Maharatna status.

Maharatna CPSEs

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

Maharatna status helps in enhanced powers:

As compared to other CPSEs, the Boards of Maharatna CPSEs have been delegated enhanced powers in the areas of:-

1.A Mahratna company can invest 15% of its networth in a single project for establishing a new venture or undertaking an acquisition activity with a cap of Rs 5,000 crore without any permission from GOI.

2.Make equity investment to establish financial joint ventures and wholly owned subsidiaries in India or abroad

Major Impact

The main objective of the Maharatna Scheme is to empower mega CPSEs to expand their operations and emerge as global giants.

2) NAVRATNA SCHEME

The Central Public Sector Enterprises (CPSEs) fulfilling the following criteria are eligible to be considered for grant of Navratna status:

A score of 60 (out of 100), based on six parameters which include

1. Net Profit to Net Worth

2. Manpower cost to cost of production or services

3. Gross margin as capital employed

4. Gross profit as Turnover

5. Earnings per Share

6. Inter-Sectoral comparison based on Net profit to net worth.

The number of PSUs with Navratna status in the country now stands at 16. National Buildings Construction Corporation Limited' (NBCC) and 'Engineers India Limited' (EIL) are the most recent addition to this coveted status granted by the Department of Public Enterprises.

There are seventeen CPSEs granted Navratna status list include:

Bharat Electronics Limited
Bharat Petroleum Corporation Limited
Engineers India Limited*
Hindustan Aeronautics Limited
Hindustan Petroleum Corporation Limited
Mahanagar Telephone Nigam Limited
National Aluminium Company Limited
National Buildings Construction Corporation Limited
NMDC Limited
Neyveli Lignite Corporation Limited
Oil India Limited*
Power Finance Corporation Limited
Power Grid Corporation of India Limited
Rashtriya Ispat Nigam Limited
Rural Electrification Corporation Limited
Shipping Corporation of India Limited
Container Corporation of India Limited

Enhancement of delegated powers of Navratna PSUs

1.The ceiling on investment to establish financial joint ventures and wholly owned subsidiaries in India or abroad shall be 15% of the networth of the PSU in one project limited to Rs. 1000 crore..

2.The Board of Directors of these PSUs shall have the powers for mergers and acquisitions, subject to the conditions.

3) MINIRATNA SCHEME

In October 1997, the Government had also decided to grant enhanced autonomy and delegation of financial powers to some other profit making companies subject to certain eligibility conditions and guidelines to make them efficient and competitive. These companies called Miniratna’, are in two Category-I,II.

The eligibility conditions and criteria are:

1.Category –I CPSEs should have made profit in the last three years continuously, the pre-tax profit should have been Rs. 30 crore or more in at least one of the three years and should have a positive net worth.

2. Category-II CPSEs should have made profit for the last three years continuously and should have a positive net worth.

3. These CPSEs shall be eligible for the enhanced delegated powers provided they have not defaulted in the repayment of loans/interest payment on any loans due to the Government.

Presently, there are 68 ‘Miniratna’ CPSEs (54 Category –I and 18 Category-II).

Enhancement of delegated powers of MINIRATNA PSUs.

Miniratna-I: up to Rs. 500 crore or equal to their net worth, whichever is lower.

Miniratna-II: up to Rs. 300 crore or up to 50% of their net worth, whichever is lower.