Context: The Centre approved the upgradation of Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC) as the country’s 25th and 26th Navratna companies respectively.

Background: –

• All seven listed Central Public Sector Enterprises (CPSEs) of the Indian Railways now have Navratna status. The Indian Railways have a total 12 CPSEs.

Key Points

• The Government of India classifies Central Public Sector Enterprises (CPSEs) into Maharatna, Navratna, and Miniratna categories to grant them varying degrees of financial and operational autonomy. This classification aims to enhance efficiency, competitiveness, and decision-making powers in India’s public sector enterprises.

Criteria for grant of Maharatna status to CPSEs

• The CPSEs meeting the following criteria are eligible to be considered for grant of Maharatna status.
  • Having Navratna status
  • Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations
  • An average annual turnover of more than Rs. 25,000 crore during the last 3 years
  • An average annual net worth of more than Rs. 15,000 crore during the last 3 years
  • An average annual net profit after tax of more than Rs. 5,000 crore during the last 3 years
  • Should have significant global presence/international operations.

Criteria for grant of Navratna status to CPSEs

• Navratnas are the second category of the central government-owned ‘Ratna’ companies, placed between the Maharatnas and the Miniratnas.
• The Department of Public Enterprises (DPE) of the Ministry of Finance picks the CPSEs for Navratna status. Six indicators are considered: (i) ratio of net profit to net worth, (ii) ratio of manpower cost to total cost of production or services, (iii) ratio of profit before depreciation, interest, and tax (PBDIT) to capital employed or return on capital employed, (iv) ratio of profit before interest and taxes (PBIT) to turnover, (v) earning per share, and (vi) inter-sectoral performance of the company.
• The six indicators carry weights from 10 (for earning per share) to 25 (for ratio of net profit to net worth).
• If a CPSE has a composite score of 60 or higher for all six indicators, and has obtained an Excellent or Very Good MOU rating in three of the last five years, it is eligible to be considered for Navratna status.

Criteria for grant of Miniratna status to CPSE 

• Miniratna Category-I status: – The CPSEs which have made profit in the last three years continuously, pre-tax profit is Rs.30 crores or more in at least one of the three years and have a positive net worth are eligible to be considered for grant of Miniratna-I status.
• Miniratna Category-II status: – The CPSEs which have made profit for the last three years continuously and have a positive net worth are eligible to be considered for grant of Miniratna-II status.
  • Miniratna CPSEs should have not defaulted in the repayment of loans/interest payment on any loans due to the Government.
  • Miniratna CPSEs shall not depend upon budgetary support or Government guarantees.

Source: Indian Express