Hindustan Aeronautics may be upgraded to Maharatna category by December

This would impact greater operational and financial autonomy to the HAL's board, allowing it to make project investments up to Rs 5000 crore without seeking government approval

State-run Hindustan Aeronautics Limited (HAL) is likely to be upgraded to the category of Maharatna from its current status of Navratna among the Central Public Sector Enterprises (CPSEs) by the end of this calendar year, a senior finance ministry official said.

This would impart greater operational and financial autonomy to the HAL’s board, allowing it to make project investments up to Rs 5,000 crore without seeking government approval. A Navratna, on the other hand, is permitted to make autonomous project investments up to Rs 1,000 crore only.

“There is huge scope for upgrading HAL into the Maharatna category. The apex committee (group of secretaries) has done all the formalities for it. It is almost at the final stage and we are expecting it to be finalised by the end of this year,” said the official, requesting anonymity.

HAL has garnered significant attention due to Prime Minister Narendra Modi's emphasis on self-reliance (Atmanirbhar Bharat), which has contributed to the company securing substantial defence and manufacturing contracts. In May, ahead of the general elections, Modi praised the performance of HAL. “Look at HAL, it achieved a record profit of Rs 4,000 crore in the fourth quarter (of FY24),” Modi had said.

Currently, there are 13 Maharatna CPSEs, and 25 Navratna CPSEs in India. In August 2023, the finance ministry had upgraded Oil India to the Maharatna category.

The official also said that the government will review the criteria of Ratna categorisation and may introduce an option to downgrade a CPSE if its performance falls below par.

Last month, Union Finance Minister Nirmala Sitharaman approved the upgradation of four CPSEs — Railtel Corporation of India, Solar Energy Corporation of India, Satluj Jal Vidyut Nigam, and National Hydroelectric Power Corporation — to Navratna status from Miniratna category.

A Maharatna must be listed on an Indian stock exchange, with a minimum prescribed public shareholding of 25 per cent based on Securities and Exchange Board of India (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 of India owns 71.65 per cent stake in HAL. The company’s consolidated net profit for the April-June quarter of FY25 rose significantly by 77 per cent to Rs 1,437 crore year-on-year (Y-o-Y). Revenue from operations also saw an 11 per cent increase, reaching Rs 4,348 crore, Y-o-Y.

CPSEs that are Miniratna-I, Schedule ‘A’, and have obtained “excellent” or “very good” MoU (Memorandum of Understanding) ratings in three of the last five years, and have a composite score of 60 or above in six selected performance indicators, are eligible to be considered for grant of Navratna status.

The government introduced the Navratna scheme in 1997 to identify CPSEs that had comparative advantages over other State-owned companies, and to support them in their drive to become global giants. Under this scheme, the boards of Navratna CPSEs have been delegated autonomy in the areas of powers in capital expenditure, investment in joint ventures/subsidiaries, mergers and acquisitions, and human resources management, among others.