Navratna PSU: Benefits and Status

NAVRATNA PSUs:SIGNIFICANCE OF NHPC, SJVN, RAILTEL, AND SECI BECOMING NAVARATNAS

1. What is a Navratna PSU?

A Navratna PSU (Public Sector Undertaking) is a central government enterprise in India that has been granted enhanced financial and operational autonomy due to its outstanding performance. This status allows these companies greater flexibility in making strategic decisions, investing in projects, and expanding operations without requiring extensive government approvals.

2. What are the benefits of being a Navratna PSU?

Navratna PSUs enjoy several key benefits, including:

• Increased Financial Autonomy: They can invest up to ₹1,000 crore or 15% of their net worth in a single project without needing prior government approval and can invest up to 30% of their net worth in a year, as long as it stays below ₹1,000 crore.

• Operational Flexibility: These companies can establish overseas subsidiaries, form joint ventures, and enter into technology collaborations, giving them the ability to expand globally and optimize their operations.

• Organizational Restructuring: They have the authority to undertake internal restructuring, set up new profit centers, open offices domestically and internationally, and create new activity centers, which enhances their ability to respond to market conditions.

• No Monetary Ceiling for Capital Expenditure: Navratna PSUs can incur capital expenditure on new projects or replacements without any monetary ceiling, enabling them to pursue large-scale investments that drive growth.

3. What is the criteria to become a Navratna PSU?

To be eligible for Navratna status, a Central Public Sector Enterprise (CPSE) must meet the following criteria:

• Miniratna Category I Status: The company must already be classified as a Miniratna Category I and be listed under Schedule ‘A’ of CPSEs.

• Consistent Performance: The company must have consistently received an “Excellent” or “Very Good” rating under the Memorandum of Understanding (MoU) system for at least three out of the last five years.

• Composite Score: The company must achieve a composite score of 60 or above based on six key performance indicators:

• Net Profit to Net Worth (25 points)

• Manpower Cost to Total Cost of Production or Services (15 points)

• PBDIT (Profit Before Depreciation, Interest, and Taxes) to Capital Employed (15 points)

• PBIT (Profit Before Interest and Taxes) to Turnover (15 points)

• Earnings Per Share (10 points)

• Inter-Sectoral Performance (20 points)

4. How many Navratna PSUs are there now?

With the recent addition of NHPC, SJVN, RailTel, and Solar Energy Corporation of India (SECI), the total number of Navratna PSUs in India has risen to 25. This status grants these companies more autonomy in financial and operational matters, enabling them to take on larger projects and expand their market presence both domestically and internationally.

In conclusion, the Navratna status is a significant achievement for these companies, providing them with the necessary tools and flexibility to drive growth, enhance efficiency, and strengthen their competitive position in the global market.

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