The government today granted Maharatna status to BHEL and GAIL, a development which will provide them greater financial and functional autonomy and also ensure better valuation for shares of the two PSUs.
"The competent authority has approved the grant of Maharatna status for BHEL and GAIL which will give these public sector units greater financial autonomy," Secretary in the Department of Public Enterprises (DPE) O P Rawat told PTI.
A Maharatna firm can take investment decision of up to Rs 5,000 crore without going to the government. For Navratna firms, this limit is Rs 1,000 crore.
However, both these PSUs do not have the requisite number of non-official directors on its board and are therefore not eligible to exercise the Maharatna powers till the time required number of officials are appointed on their boards.
"Though these companies meet the other norms set by the government, their boards do not have the adequate number of independent directors," the official said.
According to sources, BHEL is short of 6 non-official directors, while GAIL is short of 4 independent directors.
The DPE has asked the Ministry of Petroleum and Natural Gas and the Department of Heavy Industry to take immediate steps to induct requisite numbers of non-official directors on boards of the two companies so that their boards could exercise delegated Maharatna powers.
"Till the time both these companies do not have required number of independent directors, their boards won't be able to exercise these enhanced powers," Rawat said.
The apex committee, headed by Cabinet Secretary Ajit Kumar Seth, has approved both the proposals for awarding the status to these two PSUs as they meet the eligibility criteria to qualify for the status.
Both the companies meet the eligibility criteria in terms of net worth, turnover and net profit.
A company qualifying for the Maharatna status should have an average annual turnover of more than Rs 25,000 crore in the last three years, according to the Department of Public Enterprises guidelines.
Among others, the PSU must have a net worth of over Rs 15,000 crore and net profit of more than Rs 5,000 crore during the last three years.
As regards BHEL, the company's net profit stood at Rs 7,039 crore on a turnover of Rs 49,244 crore. The entity's net worth stood at Rs 25,373 crore during 2011-12.
The development will help the government get a better price for its equity in BHEL which will be offloaded as part of the disinvestment programme. The government is proposing to sell the equity in the power equipment major in the next fiscal.