Maharatna and Navaratna Companies– Eligility 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We can leave aside the historical reference of using Ratna for something of prime value for a while.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: Evolution of Ratna companies
The Government-owned or controlled companies are called Central Public Sector Enterprises (CPSE).
A Government Company
Section 2 (45) of the Companies Act 2013 says a Government company is “any company in which not less than fifty-one percent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary company of such Government company.”
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 CPSEs– Maharatna 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
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
- 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.
- 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.No||Name of the Company||Industry||Head Quarters||Ministry|
|01||Bharat Heavy Electricals Limited||Electrical equipment||New Delhi||Dep Heavy Ind.|
|02||Bharat Petroleum Corporation Limited||Oil & Gas||Mumbai||Petroleum & Natural Gas|
|03||Coal India Limited||Mining & Refining||Kolkatta||Coal|
|04||GAIL (India) Limited||Energy||New Delhi||Petroleum & Natural Gas|
|05||Hindustan Petroleum Corporation Limited||Oil & Gas||Mumbai||Petroleum & Natural Gas|
|06||Indian Oil Corporation Limited||Oil & Gas||New Delhi||Petroleum & Natural Gas|
|07||NTPC Limited||Electricity||New Delhi||Power|
|08||Oil & Natural Gas Corporation Limited||Oil,Gas and Power||New Delhi||Petroleum & Natural Gas|
|09||Power Grid Corporation of India Limited||Electricity Grids||Gurgaon||Power|
|10||Steel Authority of India Limited||Steel||New Delhi||Steel|
Navaratna CPSEs As of January 2020
|Sr.No||Name of the Company||Industry||Head Quarters||Ministry|
|01||Bharat Electronics Limited||Aerospace Defence||Bangalore||Defence|
|02||Container Corporation of India Limited||Logistic||Mumbai||Railway|
|03||Engineers India Limited||Engg Consultancy EPC||New Delhi||Petroleum & Natural Gas|
|04||Hindustan Aeronautics Limited||Aerospace Defence||Bangalore||Defence|
|05||Mahanagar Telephone Nigam Limited||Telecommunication||New delhi||Communications|
|06||National Aluminium Company Limited||Mining & Power||Bhuvaneswar||Mines|
|07||NBCC (India) Limited||PMC/EPC/ Real Estate||New Delhi||Housing & Urban Affiars|
|08||NMDC Limited||Mining||New Delhi||Mining|
|09||NLC India Limited||Mining and Electric Utility||Neyveli- TN||Coal|
|10||Oil India Limited||Oil &Gas||New Delhi||Petroleum & Natural Gas|
|11||Power Finance Corporation Limited||Financial Service||New Delhi||Power|
|12||Rashtriya Ispat Nigam Limited||Steel/Iron||Vishakapatanam||Steel|
|13||Rural Electrification Corporation Limited||Infrastructure Finance||New Delhi||Power|
|14||Shipping Corporation of India Limited||Shipping||Mumbai||Shipping|
Mini Ratna Category – I CPSEs As Of January 2020
|Tot No. 62|
|Airports Authority of India||Antrix Corporation Limited||Balmer Lawrie & Co. Limited|
|Bharat Coking Coal Limited||Bharat Dynamics Limited||BEML Limited|
|Bharat Sanchar Nigam Limited||Bridge & Roof Company (India) Limited||Central Warehousing Corporation|
|Central Coalfields Limited||Central Mine Planning & Design Institute Limited||Chennai Petroleum Corporation Limited|
|Cochin Shipyard Limited||Cotton Corporation of India Limited||EdCIL (India) Limited|
|Kamarajar Port Limited||Garden Reach Shipbuilders & Engineers Limited||Goa Shipyard Limited|
|Hindustan Copper Limited||HLL Lifecare Limited||Hindustan Newsprint Limited|
|Hindustan Paper Corporation Limited||Housing & Urban Development Corporation Limited||HSCC (India) Limited|
|India Tourism Development Corporation Limited||Indian Rare Earths Limited||Indian Railway Catering & Tourism Corporation Limited|
|Indian Railway Finance Corporation Limited||Indian Renewable Energy Development Agency Limited||India Trade Promotion Organization|
|IRCON International Limited||KIOCL Limited||Mazagaon Dock Shipbuilders Limited|
|Mahanadi Coalfields Limited||MOIL Limited||Mangalore Refinery & Petrochemical Limited|
|Mineral Exploration Corporation Limited||Mishra Dhatu Nigam Limited||MMTC Limited|
|MSTC Limited||National Fertilizers Limited||National Projects Construction Corporation Limited|
|National Small Industries Corporation Limited||National Seeds Corporation||NHPC Limited|
|Northern Coalfields Limited||North Eastern Electric Power Corporation Limited||Numaligarh Refinery Limited|
|ONGC Videsh Limited||Pawan Hans Helicopters Limited||Projects & Development India Limited|
|Railtel Corporation of India Limited||Rail Vikas Nigam Limited||Rashtriya Chemicals & Fertilizers Limited|
|RITES Limited||SJVN Limited||Security Printing and Minting Corporation of India Limited|
|South Eastern Coalfields Limited||Telecommunications Consultants India Limited||THDC India Limited|
|Western Coalfields Limited||WAPCOS Limited|
Mini Ratna Category – II CPSEs As Of January 2020
|Artificial Limbs Manufacturing Corporation of India||Bharat Pumps & Compressors Limited||Broadcast Engineering Consultants India Limited|
|Central Railside Warehouse Company Limited||Engineering Projects (India) Limited||FCI Aravali Gypsum & Minerals India Limited|
|Ferro Scrap Nigam Limited||HMT (International) Limited||Indian Medicines & Pharmaceuticals Corporation Limited|
|MECON Limited||National Film Development Corporation Limited||Rajasthan 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.