Govt considers easier regulations for CPSEs' entry into 'Ratna' club

Ratna status allows CPSEs to conduct biz without hassle

The Union Finance Ministry is considering a revision to the entry regulations governing the Maharatna, Navratna, and Miniratna statuses for central public sector enterprises (CPSEs), according to two senior government officials familiar with the matter.

The aim is to ease the entry of more state-owned companies into these categories.

“We're working on it,” said one official. "This is likely to be part of the first 100 days’ agenda of the next government. The relaxation of the norms may make more CPSEs eligible to join the Ratna categories.”

A query sent to the finance ministry in this connection remained unanswered at the time of going to press.

The second official noted that the Ratna status allows CPSEs to conduct business without hassle. “They don’t have to seek the government's permission for every business decision,” the official added.

India's ratnas*
 

13 Maharatnas

20 Navratnas

54 Category-I Miniratnas

11 Category-II Miniratnas
 

*Data as on April 30, 2024
Source: Government source

R S Sharma, former chairman of the Oil and Natural Gas Corporation (ONGC), pointed out the benefits of the Ratna status. “It elevates a CPSE’s stature. Also, when it gets listed, its valuation increases. The relaxation in rules will benefit both government and CPSEs,” he said.

 

As on April 30, 2024, there were 13 Maharatnas, 20 Navratnas, 54 Category I Miniratnas, and 11 Category II Miniratnas. Currently, there are 253 active CPSEs in the country, said the second official quoted earlier.

A Maharatna must be listed on an Indian stock exchange with a minimum prescribed public shareholding of 25 per cent based on Sebi regulations. The state-owned company should also have an average annual turnover of more than Rs 25,000 crore, an average annual net worth of more than Rs 15,000 crore, and an average annual net profit after tax of over Rs 5,000 crore in the past three years. Moreover, it should have a significant global presence or international operations.

The Maharatna scheme, introduced in 2010, aims to empower mega CPSEs to expand their operations and emerge as global giants.

The government grants Navratna status to CPSEs that have obtained an “excellent” or “very good” memorandum of understanding (MoU) rating in three of the past five years. They should also have a composite score of 60 or above in six selected performance indicators, such as net profit-to-net worth; manpower cost-to-total cost of production/services; profit before depreciation, interest and taxes-to capital employed; profit before interest and taxes-to-turnover; earnings per share; and inter-sectoral performance.

The Navratna scheme was introduced in 1997 to identify CPSEs with comparative advantages and support them in their drive to become global giants. Under this scheme, the boards of Navratna CPSEs have been delegated autonomy and enhanced powers in areas, such as capital expenditure, investment in joint ventures/subsidiaries, mergers & acquisitions, and human resources management.

Miniratnas are divided into two categories. Category I Miniratna status is considered for those CPSEs that have made a profit in the past three years continuously, with a pre-tax profit of Rs 30 crore or more in at least one of the three years, and have a positive net worth.

Category II Miniratnas are those CPSEs that have made a profit for the past three years continuously and have a positive net worth.

Notably, Miniratna CPSEs should not have defaulted in the repayment of loans or interest payment on any loan due to the government, and they should not depend upon budgetary support or government guarantees.

In October 1997, the government 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 Miniratnas, are in two categories, namely, Category- I and Category-II.