PSU Explainer – What are Miniratna, Navratna and Maharatna companies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s central public sector enterprises (CPSEs) are classified into three major categories – Miniratna, Navratna and Maharatna CPSEs.

The main aim of assigning the “ratna” statuses to various CPSEs was to give operational freedom and decision-making power to the state-run entities. The CPSEs can decide on certain matters such as investment and new projects without approaching the government until a particular threshold.

As of last Friday, there were 57 Miniratna, 16 Navratna and 13 Maharatna companies. IREDA, then become the 17th Navratna company after being granted that status. The management of IREDA told CNBC-TV18 that it intends to now become a “Maharatna” company going forward.

Here’s how India’s CPSEs are classified:

Miniratna Status

CPSEs are put in two sub-categories under the Miniratna status – Miniratna-I and Miniratna – II.

Miniratna Category-I status

CPSEs which reported profits in three consecutive years, have a pre-tax profit of ₹30 crore or more in at least one of the three years, and have a positive net worth are classified as a Miniratna-I PSU.

Miniratna Category-II status

PSUs with a profit for the last three successive years and have a positive net worth are classified as Miniratna-II companies.

In addition to these conditions, a CPSE should have not defaulted on repayment of loans or interest due to the government. Also, Miniratna entities need not depend upon budgetary support or government guarantees.

Navratna status

PSUs that have a Miniratna-I status and have obtained an “Excellent” or “Very Good” MoU rating in three out of the last five years and have a composite score of 60 or more in six selected performance indicators are eligible to be considered for a “Navratna” upgrade. These are the six parameters:

• Net Profit to Net Worth
• Manpower Cost to Total Cost of Production
• PBDIT to Capital Employed
• PBIT To Turnover
• Earnings Per Share
• Inter-Sectoral Performance

Some of the PSUs currently classified under the “Navratna” category including IREDA are BEL, CONCOR, Hindustan Aeronautics, NALCO, NBCC, NMDC, PFC among others.

Maharatna status

A PSU is eligible for being granted a “Maharatna” status, in case it meets the following criteria:

• Should have a “Navratna” status
• Should be listed on the Indian stock exchanges
• Should be compliant with minimum shareholding norms
• Average annual turnover of more than ₹25,000 crore and average annual net worth of over ₹15,000 crore in the last three years
• Average annual net profit of over ₹5,000 crore in the last three years along with significant global presence.

BHEL, BPCL, Coal India, GAIL, HPCL, Indian Oil, NTPC, ONGC are some of the Maharatna PSUs.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow