The ideas Behind Classifying Maharatna and Navaratna companies

Maharatna and Navaratna CompaniesEligility Critera, Benefits

Maharatna and Navaratna Companies Criteria: The word Ratna in Sanskrit means gem, Navaratna is nine gems. Ratna is also used to acclaim a thing of supreme quality. In that sense, by a Navaratna company, it’s meant that the company is an extremely well-managed, profit-making company.

Similarly, If you use the word gem to describe a person you mean that he is extremely pleasing, good, or helpful.

Emperor Akbar’s Navaratna

The word Ratna was used during the Mughal period as a sign of royal recognition of a person for his reputation as a scholar, administrator, leader, etc. It is said that the 09 members of Emperor Akbar’s Royal Court were collectively known as Navaratna.

Among them were scholars and ministers such as Abul-Fazal (Grand Vizar), Raja Todar Mal (Finance Minister), Abdul Rahim Khan-I-Khana (Poet), Raja Birbal (Advisor & Main Commander), Faizi (Poet), Fakir Aziao-Din (Mystic), Tansen (Classical Singer), Raja Man Singh I (General), and Mulla Do-Piyaza (Advisor & Vizar).

We can leave aside the historical reference of using Ratna for something of prime value for a while. And, let us see how that term was found befitting to describe Government-owned lucrative mega-companies today they are classified as Maharatna and Navaratna Companies Criteria

Maharatna and Navaratna Companies

Maharatna and Navaratna Companies: Evolution of Ratna companies

The Government-owned or controlled companies are called Central Public Sector Enterprises (CPSE).

Licence Raj

The period between 1947 and 1991 saw India’s governance heavily leaning on Socialistic principles. The government’s economic and social policies were shaped within the framework of these principles. Most major industries, utilities, and transportation systems were held and controlled by the State.

The role of the private sector in industrial activity was restricted through heavy regulations known as Licence Raj. It was a system controlled by a host of licenses, and regulations, and the accompanying bureaucracy and red tape. It was aimed at controlling the establishment, expansion, and ownership of private industries purely in terms of the five-year plans. The main idea was to prevent monopolistic tendencies in industries.

Rulers strongly believed that the government’s direct participation in all spheres of economic and industrial activities was necessary for economic development. Industries were set up in the public sector in order to boost the economy through rapid industrialization and economic growth.

Yet, there was a growing number of loss-making CPSEs, eating into the public exchequer. The economy continued to stagnate with an average annual growth rate of 3.5% during this period.

By the mid-1980s, the govt decided to take a series of measures to help revive the loss-making companies and also to improve the overall performance of CPSEs.

As part of the revival scheme, the sick CPSEs were proposed to be referred to institutions like the Board of Industrial and Financial Reconstruction (BIFR).

Further, the government also introduced a system of Performance Contracts or Memorandum of Understanding between CPSEs and the concerned Ministries to help improve the performance of the government-owned companies.

Later came the schemes of Maharatna and Navaratna companies

Performance Contracts – Maharatna and Navaratna Companies

A Performance Contract also called the Memorandum of Understanding (MoU) is an agreement between the government and the CPSE outlining their respective obligations towards achieving certain goals and objectives.

It was based on the belief that CPSEs which are enjoying certain advantages in their own market can be world beaters if only they are allowed to perform freely. And the government’s role will be limited to the areas of monitoring and reviewing the performance in relation to the achieved objectives.

The first set of MoU was signed in the 1987-88 period. The new industrial Policy of 1991 made it mandatory for CPSEs to enter into MoUs with their respective Ministries. In effect, MoUs served a dual purpose

  • For CPSEs, it is a means to gain greater autonomy to implement a strategic integrated approach to improve performance.
  • For the Government, the MoU system is a tool for performance evaluation and management among CPSEs.

Main Objects of The MoU System

Increased autonomy to CPSEs to improve performance
Greater clarity to the goals and objectives of CPSEs
Objective criteria for Management’s performance evaluation
Incentives to CPSEs for better performance

According to the annual report of 2018-19 released by the Department of Public Enterprises, there were 348 Central Public Sector Enterprises under the administrative control of various Ministries/Departments as of 31.3.2019.

Out of these 348 CPSEs, 249 are in operation, 86 CPSEs are yet to start commercial operation, and 13 CPSEs are under closure/liquidation.

Classification of CPSEsMaharatna And Navaratna Companies

With the liberalization of the Indian economy in 1991, the CPSEs were forced to make drastic changes in their strategy to suit the emerging global perspective. They had to come out of the Government shield and compete with international companies. And, the Government wanted to help them to face the challenge and become world-beaters.

In 1997, the government introduced the Navaratna scheme to identify Central Public Sector Enterprises (CPSEs) that had comparative advantages and extend full support to become dominant players in the global arena. However, the support didn’t imply any financial support or contingent liability on the part of the Government. It was more of allowing enhanced freedom to take strategic decisions.

In other words, the main purpose of classifying CPSEs under various schemes such as Maharatna, Navaratna, and Miniratnas was to make them autonomous board-managed companies. This has been made possible by granting enhanced powers to the Boards of the profit-making enterprises under these schemes.

Impact of Classification of CPSEs as Maharatna And Navaratna Companies

  • Greater operational and financial autonomy for CPSEs
  • Increased powers for Company Boards to make decisions subject to conditions on :
    • Equity investments
    • Financial joint ventures (JV)
    • M&A of wholly-owned subsidiaries with conditions
    • Schemes relating to the management of human resources and training
  • ‘Maharatna’ PSUs can float fresh equity, transfer assets, divest shareholding by complying with conditions
  • Similarly, Navaratna and Miniratana companies can also enjoy enhanced powers in varying degrees in the above-said areas, subject to conditions

Salient Features of Maharatna And Navaratna Companies

Maharatna Companies

The scheme of Maharatna status was introduced in 2010, with the objective of making mega CPSEs giant international companies. The following eligibility criteria are necessary for a CPSE to be considered for Maharatna status

  • Having Navratna status
  • Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations
  • An average annual turnover of more than Rs.25,000 crores during the last 3 years
  • An average annual net worth of more than Rs. 15,000 crore during the last 3 years
  • An average annual net profit after tax of more than Rs.5,000 crores during the last 3 years
  • Should have a significant global presence/international operations.

Criteria for grant of Navratna status

Eligibility criteria for grant of Navratna Status:

  • Should possess Miniratna I status and in Schedule, ‘A’
  • Must have obtained ‘excellent’ or ‘very good’ MOU rating in three of the last five years
  • ‘Composite Score’ of performance to be 60 or above in six identified performance parameters

Criteria for grant of Miniratna status

The scheme of Miniratna status was introduced in 2010

Category-I CPSEs

  • Should have made profits in the last three years continuously
  • A pre-tax profit of Rs.30 crores or more in at least one of the last three years
  • Should have a positive net worth.

Category-II CPSEs

  • Should have made profits for the last three years continuously
  • Should have a positive net worth.

list of Maharatna and Navaratna Companies & Miniratnas

Maharatna CPSEs As of January 2020

Sr.NoName of the CompanyIndustryHead QuartersMinistry
01Bharat Heavy Electricals LimitedElectrical equipmentNew DelhiDep Heavy Ind.
02Bharat Petroleum Corporation LimitedOil & GasMumbaiPetroleum & Natural Gas
03Coal India LimitedMining & RefiningKolkattaCoal
04GAIL (India) LimitedEnergyNew DelhiPetroleum & Natural Gas
05Hindustan Petroleum Corporation LimitedOil & GasMumbaiPetroleum & Natural Gas
06Indian Oil Corporation LimitedOil & GasNew DelhiPetroleum & Natural Gas
07NTPC LimitedElectricityNew Delhi Power
08Oil & Natural Gas Corporation LimitedOil,Gas and PowerNew DelhiPetroleum & Natural Gas
09Power Grid Corporation of India LimitedElectricity GridsGurgaonPower
10Steel Authority of India LimitedSteelNew DelhiSteel


Navaratna CPSEs As of January 2020

Sr.NoName of the CompanyIndustryHead QuartersMinistry
01Bharat Electronics LimitedAerospace DefenceBangaloreDefence
02Container Corporation of India LimitedLogisticMumbaiRailway
03Engineers India LimitedEngg Consultancy EPCNew DelhiPetroleum & Natural Gas
04Hindustan Aeronautics LimitedAerospace DefenceBangaloreDefence
05Mahanagar Telephone Nigam LimitedTelecommunicationNew delhiCommunications
06National Aluminium Company LimitedMining & PowerBhuvaneswarMines
07NBCC (India) LimitedPMC/EPC/ Real EstateNew Delhi Housing & Urban Affiars
08NMDC LimitedMiningNew DelhiMining
09NLC India LimitedMining and Electric UtilityNeyveli- TNCoal
10Oil India LimitedOil &GasNew DelhiPetroleum & Natural Gas
11Power Finance Corporation LimitedFinancial ServiceNew DelhiPower
12Rashtriya Ispat Nigam LimitedSteel/IronVishakapatanamSteel
13Rural Electrification Corporation LimitedInfrastructure FinanceNew DelhiPower
14Shipping Corporation of India LimitedShippingMumbaiShipping


Mini Ratna Category – I CPSEs As Of January 2020

Tot No. 62
Airports Authority of IndiaAntrix Corporation LimitedBalmer Lawrie & Co. Limited
Bharat Coking Coal LimitedBharat Dynamics LimitedBEML Limited
Bharat Sanchar Nigam LimitedBridge & Roof Company (India) LimitedCentral Warehousing Corporation
Central Coalfields LimitedCentral Mine Planning & Design Institute LimitedChennai Petroleum Corporation Limited
Cochin Shipyard LimitedCotton Corporation of India LimitedEdCIL (India) Limited
Kamarajar Port LimitedGarden Reach Shipbuilders & Engineers LimitedGoa Shipyard Limited
Hindustan Copper LimitedHLL Lifecare LimitedHindustan Newsprint Limited
Hindustan Paper Corporation LimitedHousing & Urban Development Corporation LimitedHSCC (India) Limited
India Tourism Development Corporation LimitedIndian Rare Earths LimitedIndian Railway Catering & Tourism Corporation Limited
Indian Railway Finance Corporation LimitedIndian Renewable Energy Development Agency LimitedIndia Trade Promotion Organization
IRCON International LimitedKIOCL LimitedMazagaon Dock Shipbuilders Limited
Mahanadi Coalfields LimitedMOIL LimitedMangalore Refinery & Petrochemical Limited
Mineral Exploration Corporation LimitedMishra Dhatu Nigam LimitedMMTC Limited
MSTC LimitedNational Fertilizers LimitedNational Projects Construction Corporation Limited
National Small Industries Corporation LimitedNational Seeds CorporationNHPC Limited
Northern Coalfields LimitedNorth Eastern Electric Power Corporation LimitedNumaligarh Refinery Limited
ONGC Videsh LimitedPawan Hans Helicopters LimitedProjects & Development India Limited
Railtel Corporation of India LimitedRail Vikas Nigam LimitedRashtriya Chemicals & Fertilizers Limited
RITES LimitedSJVN LimitedSecurity Printing and Minting Corporation of India Limited
South Eastern Coalfields LimitedTelecommunications Consultants India LimitedTHDC India Limited
Western Coalfields LimitedWAPCOS Limited


Mini Ratna Category – II CPSEs As Of January 2020

Total No.12

Artificial Limbs Manufacturing Corporation of IndiaBharat Pumps & Compressors LimitedBroadcast Engineering Consultants India Limited
Central Railside Warehouse Company LimitedEngineering Projects (India) LimitedFCI Aravali Gypsum & Minerals India Limited
Ferro Scrap Nigam LimitedHMT (International) LimitedIndian Medicines & Pharmaceuticals Corporation Limited
MECON LimitedNational Film Development Corporation LimitedRajasthan Electronics & Instruments Limited


One of the major advantages of strengthening the Maharatna and Navaratna companies or the Miniratna companies is that they are among the largest employers in the respective industries or sectors. Most of these Maharatana and Navaratna companies hire candidates for various positions on a regular basis.

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