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What is a Ratna Company in India - Explained

Published on Monday, April 13, 2015
See, I was asked in an interview last year – what is the concept and purpose behind awarding ‘Maharatna’, ‘Navratna’ and ‘Miniratna’ statuses?

I answered the obvious – that when PSU-manufacturing companies do well on certain parameters they are awarded these ratna statuses. But why? – they asked – and I faltered.

Why indeed?

We know the names of the ratna companies – but do we know why the ratna status to begin with?

I have already about Maharatna, Navratna and Miniratna PSUs in India here

Today – we’re going to explore the oil drenched and grease stained world of the maharatnas, navratnas and the miniratnas!

  1. To begin with – let it be known – only Central Public Sector Enterprises (CPSEs), otherwise known as PSUs or PSEs are eligible for these statuses - only Government owned companies are up for these ratnas.

  2. And – let this be clear too – it is not only restricted to manufacturing companies – but covers ALL Government companies - i.e. all Government companies are eligible for the ratnas.

  3. But being eligible and actually being awarded the statuses are two very different things!

  4. First off, the companies have got to start from the miniratnas – then graduate to becoming a navratna and then a maharatna.

    We’ll talk about the criteria of each category in very simple language with a few figures!

  5. To be considered/ eligible to be given a Miniratna status – a CPSE (please remember the acronym!) – will have to do two things:
  • have a +ve net worth, which means the total of all its assets should be greater than the total of all the liabilities. [TA-TL = +ve NW]
as it should be – what kind of company would be a ratna is its liabilities exceed its assets and paying capacity!
  • and – should have earned profit for the last 3 consecutive years.
There are two categories of miniratnas, all the miniratnas are by default in Category 2.

6. The two categories of miniratnas:

·         Category 1 Miniratnas – are those miniratnas which have earned a net profit of Rs. 30 crore or more in any of the previous three consecutive financial years.
·         Category 2 – are those which have a +ve net worth and profits in the last 3 consecutive years.

7. What does it entail to be a miniratna


What happens when you are given an exclusive status or an award? – you generally get some special treatment or benefit – so to be a miniratna -

Category 1 – autonomy/ freedom to take capital expenditure decisions to the tune of Rs. 500 crore or the Net Worth, whichever is lower.

Autonomy means that the company can take its own decisions without the requirement of permission from any authority – in this case the Government.

Don’t have to take government’s permission if you want to buy high-tech production machinery worth Rs. 450 crore. But if Net Worth of your company is Rs. 400 crore – then you will have to take Government’s permission as proposed expense is exceeding the Net Worth.

Category 2 – same thing but the limits are Rs. 300 crore or 50% of the Net Worth, whichever is lower.

Suppose if equipment costs Rs. 300 crore and Net Worth is Rs. 500 crore. Our limits will be – 300 vs 50% x 500 – 300 vs 250, whichever is lower = Rs. 250 crores.

Thus, to buy equipment worth 300 crores – Government’s permission will be required!

I hope these calculation concepts are clear – I won’t be repeating them for the other categories.

8. That brings us to the Navratnas.

To be a Navratna – a CPSE should have to be a Miniratna Category – I, and Schedule ‘A’.

It should have obtained - ‘excellent’ or ‘very good’ rating under the Memorandum of Understanding (MoU) system, in 3 of the last 5 years.

Also it should have composite score of 60 or above out of 100 in the following six performance parameters:
  • profit before depreciation; 
  • profit before interest and taxes to turnover, 
  • net profit to net worth;
  • interest and taxes to capital employed;
  • earnings per share;
  • man power cost to total cost of production/ services.

9. Benefits for being a navratna?

Single project expenditure to the tune of Rs. 1000 crore or 15% of net worth, whichever is lower, needs no government permission.

Plus more autonomy in taking operational decisions.

10. To be a Maharatna the CPSE must be a Navratna – and

  • It’s got to be listed on the Indian stock exchange, i.e. a listed company and adhering to all SEBI guidelines.
  • Average annual turnover of more than Rs. 20,000 crore of last 3 years.
  • Average annual net worth of more than Rs. 10,000 crore of last 3 years.
  • Average annual net profit after tax of more than Rs. 2,500 crore of last 3 years.

11. Benefits for being a Maharatnas?


The upper investment limit is Rs. 5000 crore or 15% of net worth, whichever is lower, needs no government permission.

Plus even more autonomy in taking operational decisions.

So, what does it mean to have these benefits? Well, for starters – decisions can be taken without the cumbersome government approval taking process. These companies can expand their businesses overseas with financial and operational and investment autonomy. Be able to reach global standards – and still be a PSU!

12. Trivia:


·         Maharatna status was first awarded in 2010 to
·         First Navratna was given to


There are 7 Maharatnas:

(1) Steel Authority of India (SAIL)
(2) GAIL
(3) Coal India Limited
(4) Bharat Heavy Electricals Limited (BHEL)
(5) Indian Oil Corporation Limited (IOC)
(6) National Thermal Power Corporation Limited (NTPC)
(7) Oil and Natural Gas Corporation Limited (ONGC)

There are 17 Navratnas, notable of them are:

(1) Shipping Corporation of India
(2) Hindustan Aeronautics Limited (HAL)
(3) Bharat Petroleum Corporation Limited (BPCL)
(4) Hindustan Petroleum Corporation Limited (HPCL)
(5) Mahanagar Telephone Nigam Limited (MTNL)
(6) Power Grid Corporation of India
(7) Rural Electrification Corporation of India
(8) Engineers India Limited – was given the status in mid-2014.

There are 72 Miniratnas, notable of them are:

(1) Airport Authority of India (AAI)
(2) Bharat Sanchaar Nigam Limited (BSNL)
(3) Central Warehousing Corporation
(4) Housing and Urban Development Corporation Limited (HUDCO)
(5) Indian Railway Catering and Tourism Corporation Limited (IRCTC)


13. Latest News:

·         NTPC and ONGC received the Maharatna of the Year at the 6th Dalal Street Investment Journal Awards in New Delhi.




And just for the sake of mentioning – the Cabinet Minister of Heavy Industries and Public Enterprises if Shri Anant Geete, Minister of State is Shri G. M. Siddeshwara.


Have a good day!

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ramandeep singh

Ramandeep Singh, your guide to banking and insurance exams. With 14 years of experience and 5000+ selections, Ramandeep understands the path to success, having transitioned himself from Dena Bank and SBI. He's passionate about helping you achieve your banking and insurance dreams.

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