Statuses of Public Sector Undertakings (PSUs) in India - Mini Ratna, Navaratna, Maharatna part 14

 Okay, here are the comprehensive notes from the lecture on Mini Ratna, Navaratna, and Maharatna statuses for Public Sector Undertakings (PSUs) in India.

Topic: Statuses of Public Sector Undertakings (PSUs) in India - Mini Ratna, Navaratna, Maharatna

I. Introduction

• Purpose: The Indian government grants special statuses (హోదాలు - Hōdālu) to Public Sector Undertakings (PSUs) based on their performance (పనితీరు - Panitīru) and capabilities (సామర్థ్యాలు - Sāmarthyālu).

• Statuses: Mini Ratna, Navaratna, Maharatna.

• Benefit: These statuses grant varying degrees of financial and operational autonomy, particularly in making investment decisions (పెట్టుబడి నిర్ణయాలు - Peṭṭubaḍi nirṇayālu), freeing them from excessive bureaucratic control.

• Scope: These statuses are applicable only to Central Public Sector Enterprises (CPSEs) / Government-owned companies, not private sector companies.

II. Background and Rationale

• Pre-1991 Scenario: Before the 1991 economic reforms, many PSUs were heavily loss-making and inefficient.

• Reason for Failure: A major reason was the lack of autonomy (స్వయం ప్రతిపతి - svayaṁ pratipati). Decision-making was extremely slow:

  • Even minor decisions (hiring, purchasing machinery, marketing strategies) required approvals from the Managing Director, then the concerned Ministry, then the Cabinet, and sometimes even Parliament.

  • This delay prevented PSUs from adapting quickly to market changes or addressing internal issues efficiently.

• Post-1991 Reforms: The government realized that granting autonomy (స్వేచ్ఛ - svēccha) based on performance was crucial for improving PSU efficiency.

• Introduction of Statuses:

  • Mini Ratna & Navaratna: Introduced in 1997. Before this, these specific statuses did not exist.

  • Maharatna: Introduced in 2009.

• Core Idea: To empower well-performing PSUs to make their own investment decisions up to certain limits without needing multiple government approvals, thereby fostering efficiency and competitiveness.

III. Mini Ratna Status

• Introduced: 1997

• Eligibility Criteria:

  1. Must be a PSU.

  2. Must have made profits continuously for the last three years.

  3. Should not be dependent on government budgetary support or guarantees for operational expenses.

  4. Should not have defaulted on repayment of loans/interest to the government.

• Categories & Financial Autonomy:

  • Category 1:

    • Criteria: Meets general criteria AND has made a pre-tax profit of ₹30 crore or more in at least one of the last three years.

    • Financial Power: Can incur capital expenditure without government approval up to ₹500 crore or equal to their net worth, whichever is lower (Transcript mentions ₹500 crore limit).

  • Category 2:

    • Criteria: Meets general criteria (profitable for 3 years) but has not achieved a profit of ₹30 crore in any of the last three years.

    • Financial Power: Can incur capital expenditure without government approval up to ₹300 crore or 50% of their net worth, whichever is lower (Transcript mentions ₹300 crore limit).

• Current Numbers (as of lecture time):

  • Total Mini Ratnas: 75

  • Category 1: 63

  • Category 2: 12

• Benefit: Provides a basic level of investment freedom.

IV. Navaratna Status

• Introduced: 1997

• Eligibility Criteria:

  1. Must already have Mini Ratna Category 1 status.

  2. Must obtain a score of 60 or more (out of 100) based on six performance parameters evaluated by the Ministry of Heavy Industries & Public Enterprises. These parameters include:

     • Net Profit to Net Worth

     • Manpower Cost to total Cost of Production/Services

     • PBDIT (Profit Before Depreciation, Interest, and Taxes) to Capital Employed

     • PBIT (Profit Before Interest and Tax) to Turnover

     • EPS (Earning Per Share)

     • Inter-Sectoral Performance Comparison

  3. The company's Board must have at least four independent directors.

  4. (Added Requirement mentioned later): Must have made a profit exceeding ₹1000 crore in at least one of the last three consecutive profit-making years.

  5. (Added Requirement mentioned later): Must have at least a 3-star rating (out of 5).

• Financial Autonomy/Benefits:

  • Can invest up to ₹1000 crore or 15% of their net worth on a single project without seeking government approval.

  • Greater freedom in joint ventures, alliances, and establishing overseas subsidiaries.

• History & Evolution:

  • Initially (July 1997), 9 PSUs were granted Navaratna status primarily based on being top profit-makers (BPCL, HPCL, IOCL, ONGC, IPCL, VSNL, BHEL, NTPC, SAIL). Note: IPCL & VSNL were later privatized/closed.

  • Later designations were based on fulfilling the defined criteria.

  • Over time, 31 companies were designated. 2 were closed/privatized, 13 were promoted to Maharatna.

• Current Numbers (as of lecture time): 16

• List & Recent Additions (Emphasized for Exams):

  • The lecture details the timeline of additions (MTNL, GAIL in Sep 1997; HAL, BEL, PFC in 2007; NMDC, NALCO, PGCIL, REC, CIL, SCI in 2008; OIL, RINL in 2010; NLC in 2011; EIL, NBCC in 2014; CONCOR in 2014).

  • Recent / Important to track:

    • RVNL (Rail Vikas Nigam Limited) - April 6, 2023

    • ONGC Videsh Limited - April 3, 2023 (Note: Possible date mix-up in transcript order, RVNL usually listed later)

    • RCF (Rashtriya Chemicals & Fertilizers Limited) - August 29, 2023

    • RITES (Rail India Technical and Economic Service Ltd) - October 12, 2023

    • IRCON (Indian Railway Construction International Ltd) - October 12, 2023

  • Exam Relevance: Know the latest additions, their order of designation, and potentially the dates. Matching companies with dates or arranging chronologically might be asked.

V. Maharatna Status

• Introduced: Scheme formulated around 2009, implementation began shortly after.

• Purpose: To empower large, high-performing PSUs to expand their operations and emerge as global giants/ compete internationally.

• Eligibility Criteria:

  1. Must already have Navaratna status.

  2. Must be listed on an Indian stock exchange.

  3. Average annual turnover during the last 3 years must be more than ₹25,000 crore.

  4. Average annual net worth during the last 3 years must be more than ₹15,000 crore.

  5. Average annual net profit (after tax) during the last 3 years must be more than ₹5,000 crore (consecutive performance stressed).

  6. Must have a significant global presence or international operations.

• Financial Autonomy/Benefits:

  • Can invest ₹5000 crore or 15% of their net worth in a single project without government approval (significantly higher than Navaratna).

  • Enhanced powers for mergers and acquisitions.

• Current Numbers (as of lecture time): 13

• List (Implied by number, derived from promotions): ONGC, NTPC, SAIL, IOCL, CIL, BHEL, GAIL, BPCL, HPCL, PGCIL, PFC, REC, OIL (Oil India Ltd being the 13th).

VI. Key Takeaways & Exam Focus

• Understand the rationale behind these statuses (overcoming pre-1991 PSU issues via autonomy).

• Know the introduction years (1997 for Mini/Nava, 2009 for Maha).

• Memorize the eligibility criteria for each status, especially the key financial thresholds (profit, turnover, net worth).

• Know the financial autonomy limits (₹300Cr/₹500Cr for Mini, ₹1000Cr for Nava, ₹5000Cr for Maha).

• Be aware of the current numbers of companies in each category (75 Mini, 16 Nava, 13 Maha).

• Pay special attention to recent Navaratna additions (RVNL, ONGC Videsh, RCF, RITES, IRCON) – their names, designation dates, and chronological order are highly probable exam questions.

• Distinguish between criteria requiring performance in one of the last three years vs. average over three years vs. consecutive for three years.

• Understand the purpose of Maharatna status specifically targets global competitiveness.

VII. Conclusion

The Mini Ratna, Navaratna, and Maharatna schemes are crucial policy tools designed to incentivize performance and grant operational freedom to India's Public Sector Undertakings, enabling them to function more efficiently and compete effectively, both domestically and internationally. Understanding their criteria and benefits is important for assessing India's industrial policy framework.