Meaning of Navratna,Miniratna and Maharatna Companies?

What is the meaning Navratna,Miniratna and Maharatna Companies?

There are many Central Public Sector Enterprises (CPSE) which are functioning under Government of India and Navratna, Miniratna and Maharatna are the three terms which government uses to categorize all those CPSEs. The categorization depends upon various factors such as turnover, Net worth, Net profit on yearly basis and company’s presence in stock Exchange as per the SEBI’s rules. Questions may be asked in written exams under current affairs or general knowledge section on this topic. So, you should be aware of these terms.

Let us discuss all these three terms in details here:

As said above Central Public Sector Enterprises (CPSE) are divided into following three categories:

  1. Navratna
  2. Miniratna ( Category 1 and Category 2)
  3. Maharatna

Details are provided as under:

What are Navratna companies?

IN 1997, government gave the status of Navratna to 9 Public Sector Enterprises (PSEs) giving them greater autonomy to compete in the global market so as to “support [them] in their drive to become global giants. Currently there are total 17 companies having the status of Navratna. The conditions to get the Navratna status are as Under:

  1. The company must score at least 60 out of 100 on various parameters like net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes), capital employed, etc.
  2. It Must be at the status of Miniratna.
  3. Should have at least four independent directors on its board.
  4. The company must have up to Rs. 1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the whole year (not exceeding Rs. 1,000 crores).

What are Miniratnas companies in India?

The concept of Miniratna was introduced by government of India in 2002 and this status was given to total 41 public sector companies. Miniratnas are allowed to enter into joint ventures, they can set subsidiary companies and can also open offices overseas but with certain limitations. Currently there are more than 70 companies having status of Miniratna(CategoryI & II).

Miniratnas are further divided into two categories:-

Miniratna Category I:

To be called as Miniratna under category I, a company must have:

  1. Made profits for continuosly for last three years.
  2. The company should have earned a net profit of Rs. 30 crore at least once in three years.

A company with Miniratna Category I can incur capital expenditure of up-to Rs. 500 crore or equal to their net worth, whichever is lower without the need of approval from Government. Currently total 59 companies holds the status of Miniratna Category I.

Miniratna Category II:

A Public sector Company can be called as Miniratna of Category II if:

  1. It has continuously made profit for last three years.
  2. It has positive net worth.

Miniratna Category II company have autonomy to incurring the capital expenditure up to Rs. 300 crore or up to 50% of their net worth whichever is lower without prior approval from Government.

What are Maharatna companies in India?

Maharatna status was started in 2009. The status raises a company’s investment ceiling from Rs. 1,000 crore to Rs. 5,000 crore. A Maharatna firm have permission to invest 15% of their net worth in a project.

Below are the conditions for PSEs to acquire the status of Maharatna:

  1. For the last three years company should have the turnover more than Rs. 25,000 Crore.
  2. Net worth of the company for last three years should be more than Rs. 15,000 Crore.
  3. Net profit on yearly basis should be more than Rs. 5000 Crore after paying tax for last three years.
  4. The company must have its presence at Indian stock Exchange as per the SEBI’s rules of minimum prescribed public shareholding limit.
  5. Currently there are seven Maharatnas and BPCL is the eights Public sector enterprise to be included in the list.
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