INDIAN Navratna Companies
INDIAN Navratna Companies
Navratna was the title given originally to nine Public Sector Enterprises (PSEs), identified by the Government of India in 1997 as its most prestigious, which allowed them greater autonomy to compete in the global market. The number of PSEs having Navratna status has been raised to 19, the most recent addition being Oil India Limited.
Historical Symbolism
Originally, the term Navaratna meant a talisman or ornament composed of nine precious gems. Later, this symbology was adopted in the courts of King Vikramaditya and the Mughal Emperor Akbar, where the Navaratnas were a group of nine extraordinary men in their respective courts.
Significance
The Navratna status is offered to PSEs, which gives a company enhanced financial and operational autonomy and empowers it to invest up to Rs. 1000 crore or 15% of their net worth on a single project without seeking government approval. In a year, these companies can spend up to 30% of their net worth not exceeding Rs. 1000 cr. They will also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad.
Criteria
Navratna status is conferred by Department of Public Enterprises. To be qualified as a Navratna, the company must obtain a score of 60 (out of 100). The score is based on six parameters which include net profit to net worth, total manpower cost to total cost of production or cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes) to capital employed, PBDIT to turnover, EPS (Earning Per Share) and inter-sectoral performance. Additionally, a company must first be a Miniratna and have four independent directors on its board before it can be made a Navratna.
NavRatnas
The original list of 1997 included ECIL, BHEL, BPCL, HPCL, IOC, IPCL, NTPC, ONGC, SAIL and VSNL, of which Indian Petrochemicals Corporation Limited (IPCL) and Videsh Sanchar Nigam Ltd (VSNL) were later privatised. GAIL and MTNL joined the list in November 1997. In June 2007 the government awarded the coveted status to three more PSEs: BEL, HAL and Power Finance Corporation (PFC).
MiniRatnas
In addition, the government created another category called Miniratna. Miniratnas can also enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions. In 2002, there were 41 government enterprises that were awarded Miniratna status.
Category I
This designation applies to PSEs that have made profits continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years. These miniratnas granted certain autonomy like incurring capital expenditure without government approval up to Rs. 500 crore or equal to their net worth, whichever is lower.
7. Central Warehousing Corporation
Category II
This category include those PSEs which have made profits for the last three years continuously and should have a positive net worth. Category II miniratnas have autonomy to incurring the capital expenditure without government approval up to Rs. 300 crore or up to 50% of their net worth whichever is lower.
- Broadcast Engineering Consultants (I) Limited
- Central Mine Planning & Design Institute Limited
- Educational Consultants (I) Limited
- Engineering Projects (I) Limited
- Ferro Scrap Nigam Limited
- HMT (International) Limited
- HSCC (India) Limited
- India Trade Promotion Organization
- Indian Medicines Pharmaceuticals Corporation Limited
- MECON Limited
- National Film Development Corporation Limited
- PEC Limited
- Rajasthan Electronics & Instruments Limited
- Water & Power Consultancy (India) Limited
MahaRatna
In 2009, the government established the Maharatna status, which raises a company's investment ceiling from Rs. 1,000 crore to Rs. 5,000 crore.[6] The Maharatna firms would now be free to decide on investments up to 15 per cent of their net worth in a project.
Earlier, the Navaratna companies could invest up to Rs 1,000 crore without government approvals.
Criteria
In order to qualify as a Maharatna, a company must have:[6]
- Three years with an annual net profit of over Rs. 5,000 crore
- Net worth of Rs. 15,000 crore
- Turnover of Rs. 25,000 crore
Govt. of India has approved Maharatna status for NTPC,ONGC,IOC and SAIL ref:Times of India report dated 21 May 2010 and with the fast growing industrialisation many companies soon will get this designation.