The department of public enterprises (DPE) is in the process of conferring Maharatna status to Mumbai-based Hindustan Petroleum Corporation (HPCL).
If cleared, the Oil and Natural Gas Corporation (ONGC) arm will become the first subsidiary company of an existing Maharatna to get into this superior league among government-owned entities.
A company with this formal status gets the authority for equity investment to establish financial joint ventures and wholly owned subsidiaries, and to undertake mergers and acquisitions in India or abroad. Subject to a ceiling of 15 per cent of its net worth, limited to Rs 5,000 crore in one project.
Eight state-run companies are now in this league — ONGC is one. Indian Oil Corporation, GAIL, Bharat Petroleum Corporation, Coal India, Bharat Heavy Electricals, NTPC and Steel Authority of India are the others.
An informed sources said petroleum minister Dharmendra Pradhan had written to counterpart Anant G Geete at the ministry of heavy industries and public enterprises (HI & PE), recommending the status for HPC. Following this, DPE has sought ONGC's opinion and asked the ministry of petroleum if here were any technical or legal issues in the way of bestowing the to a subsidiary of a company.
HPC chairman and managing director M K Surana did not mention to a query from Business Standard in this regard.
If its comes through, the company's board of directors gets more powers to raise debt from capital markets, home and abroad (the latter subject to approval of the Reserve Bank and/or the department of economic affairs. The move comes soon after the government reportedly directed HPC to acknowledge ONGC as a promoter in regulatory filings. HPC had earlier namedthe President of India, with no stake, as promoter and ONGC, with 51.11 per cent stake, as a public shareholder. This had led to a tussle between the companies, for over a year now. ONGC acquired the controlling stake in HPC for Rs 36,915 crore in January 2018.
“This might not be welcoming news for ONGC, as its subsidiary company's board will be almost at par with its own in terms of powers. However, with BPC already in the list of Maharatna majors, HPC deserves to be there, with more financial freedom. More, it is meeting all the criteria for a Maharatna major,\" said an industry expert, on terms of anonymity.
To become a Maharatna major, a company should have annual turnover of Rs 20,000 crore, average annual net worth of more than Rs 10,000 crore and average annual net profit of more than Rs 2,500 crore for three financial years in a row. HPC's net profit for the past three financial years was Rs 6,357 crore (2017-18), Rs 6,209 crore (2016-17) and Rs 3,726 crore (2015-16). Net worth was Rs 23,948 crore in FY18, Rs 20,347 crore in FY17 and Rs 17,970 crore in FY16.
The government introduced the Maharatna scheme from May 2010, to empower mega central public sector enterprises to expand and emerge as global giants. A decidion on this status is taken first by an inter-ministerial committee (IMC), which has the secretaries of DPE, the department of expenditure, of the ministry concerned and a Niti Aayog representative. After this, by a panel headed by the cabinet secretary. A final call will be taken by the minister of HI & PE.