Are you one of those folks that hear the term Navratna or Maharatna being used while referring to large government owned public sector companies and do not fully understand what that means? I am one among those individuals and that is why I started searching the Internet on what each of these terms mean. After detailed research, I was able to narrow down on the most important details reg. these classifications. The idea behind this article to explain the same...
What are these Categories?
The Government of India categorizes our Public Sector Companies based on their size into 3 main categories:
1. Maharatna
2. Navratna and
3. Miniratna
Let us take a look at them one by one in ascending order of size...
Miniratna Public Sector Company or Miniratna PSU:
Miniratnas are those small to mid sized public sector enterprises that are making good profits and have started building a reputation. Because of the sheer number of companies that come under this grouping, the government has gone a step further to classify companies as Miniratna Category 1 and Miniratna Category 2.
1. Category I companies should have made profit in the last three years continuously, the pre-tax profit should have been Rs. 30 crore or more in at least one of the three years and should have a positive net worth.
2. Category II companies should have made profit for the last three years continuously and should have a positive net worth.
In addition - These companies should not have defaulted in the repayment of loans/interest payment on any loans due to the Government. Also, these public sector enterprises shall not depend upon budgetary support or Government guarantee for their functioning.
To view the list of companies that fall under this Miniratna status - click here
Navratna Public Sector Company or Navratna PSU:
Any PSU that is already in the Miniratna Category 1 group can get Navratna status if the company can score at least 60 points out of 100 in the following performance parameters combined:
| Performance Parameters | Maximum Points |
|---|---|
| Net Profit to Net Worth Ratio | 25 |
| Manpower cost to cost of production or services | 15 |
| Gross margin as capital employed | 15 |
| Gross profit as Turnover | 15 |
| earnings per Share | 10 |
| Inter-Sectoral comparison based on Net profit to net worth | 20 |
| Total | 100 |
This Navratna Status was originally granted to nine PSU's that were extremely large and were making great profits. That is how the "Nava" part of the name came in and over the years many more companies have joined this exclusive club.
To view the list of companies that come under this Navratna status - click here
Maharatna Public Sector Company or Maharatna PSU:
Any PSU Company that is already in the Navratna Status and meets the following additional conditions can be categorized as the most elusive Maharatna Company...
1. Listed on the Indian stock exchange, with a minimum prescribed public shareholding under SEBI regulations
2. An average annual turnover of more than Rs. 20,000 crore during the last three years
3. An average annual net worth of more than Rs.10,000 crore during the last three years
4. An average annual net profit of more than Rs. 2,500 crore during the last 3 years
The performance of Maharatna CPSEs would be reviewed annually by the Inter-Ministerial Committee, and thereafter by the Apex Committee headed by the Cabinet Secretary which will recommend continuation/divestment of Maharatna status. The review will focus on the eligibility of Maharatna CPSEs vis-à-vis the criteria laid down for grant of Maharatna status, and their performance during the previous year(s).
There are only 7 Companies in our country that can boast of this status of being a Maharatna Company. To view the list of companies that come under this Maharatna status - click here
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