The Department of Public Enterprise (Ministry of Finance), recently granted ‘Navratana’ status to Power PSUs- Railtel Corporation of India, Solar Energy Corporation of India, Satluj Jal Vidyut Nigam, and National Hydroelectric Power Corporation.
About Navratna status:
- The Navratna status is a prestigious classification granted to certain Public Sector Undertakings(PSUs) in India.
- by the Government of India. Here’s a detailed look at the criteria, benefits, and process associated with Navratna status:
- The term “Navratna” translates to “nine gems” and signifies a select group of PSUs, recognized for their strong performance and potential.
- The status is intended to enhance the autonomy of these enterprises and improve their operational efficiency.
- Examples include Bharat Heavy Electricals Limited (BHEL), Coal India Limited (CIL), Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), Steel Authority of India Limited (SAIL).
Criteria for Granting Navratna Status:
- The company must be a public sector enterprise with the government holding a majority stake (more than 51%).
- The company should already hold the Miniratna Category I status and be listed under Schedule A of CPSEs.
- It must have consistently received an outstanding rating under the Memorandum of Understanding (MoU) System for at least three out of the last five years.
- It needs to meet specific criteria including net profit to net worth, PBDIT to capital employed, gross margin as capital expenditure, manpower cost to cost of production or services, gross profit as turnover, and earnings per share.
- Performance Indicators: The company must meet certain financial and operational criteria, including:
- High return on net worth and a good track record in terms of productivity and performance.
- An average annual net profit of at least INR 2,500 crore during the last three years.
- The company should demonstrate strong corporate governance practices, including transparency in operations and adherence to regulatory requirements.
- The company must have a track record of effective management and strategic planning.
Benefits of Navratna Status
- Companies with Navratna status enjoy greater financial and operational autonomy.
- They have more freedom in making strategic decisions, such as investments, joint ventures, and capital expenditure, without needing prior government approval.
- Navratna status boosts the company’s credibility in the market, improving its ability to attract investments and forge partnerships.
- The increased autonomy allows these companies to operate more flexibly and competitively, responding quickly to market changes and opportunities.
Ref: Source
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Frequently Asked Question:
What is Navratna status?
Navratna status recognizes these enterprises for their strong performance, potential, and financial health, and aims to enhance their autonomy and operational efficiency.
Why is it called Navratna?
The term “Navratna” translates to “nine gems” and symbolizes a select group of nine distinguished PSUs recognized for their exceptional performance and contribution to the economy.
Can Navratna status be revoked?
Yes, Navratna status can be revoked if the company fails to meet the performance criteria or in case governance or operational issues.