Context: The process for upgrading and downgrading of categorised CPSEs to higher/lower schedule has been simplified and the Finance Minister is now final authority for grading CPSEs.
About Central Public Sector enterprises
CPSEs are slotted in four categories — A, B, C and D. This has a bearing on organisational structure and salaries of Board level incumbents.
- According to the Department of Public Enterprises under the Finance Ministry, as on June 26, 2023, 71 CPSEs (NTPC, Indian Oil, ONGC, SAIL, BHEL among others) were in A category, while 68 (Air India Assets Holding, Cement Corporation, Garden Reach, besides others) fell in B category; 38 were placed in C and five in D category.
- CPSEs are also classified into four Ratnas — Maharatna (11 CPSEs), Navaratna (12 CPSEs), Mini Ratnas-1 (58 CPSEs) and MiniRatnas-2 (10 CPSEs) to define financial and organisational powers.
The criteria laid down by the Government for grant of Maharatna, Navratna and Miniratna status to Central Public Sector Enterprises (CPSEs) is given below:
- Maharatna: 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.
- Navratna: The CPSEs which are Miniratna I, Schedule ‘A’ and have obtained ‘excellent’ or ‘very good’ MOU rating in three of the last five years and having composite score of 60 or above in following six selected performance indicators are eligible to be considered for grant of Navratna status.
- Net Profit to Net worth: 25%
- Manpower Cost to total Cost of Production or Cost of Services: 15%
- PBDIT to Capital employed: 15%
- PBIT to Turnover: 15%
- Earnings Per Share: 10%
- Inter Sectoral Performance: 20%
- Miniratna:
- 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.
Process for Upgradation
- All categorised CPSEs would continue to come to the Department of Public Enterprises (DPE) for upgradation of their schedule with the approval of their Administrative Ministry or Department based on existing guidelines.
- The proposals for categorisation are to be furnished to the DPE with the concurrence of the financial advisor and the approval of the Minister-in-charge of the administrative Ministry/Department concerned.
- The proposal should contain performance of the CPSE for the last five years on
- Quantitative parameters: investment, capital employed, net sales, profit before tax, number of employees and units, capacity addition, revenue per employee amongst others.
- Qualitative factors include national importance, complexities of problems faced, technology, expansion prospects and diversification and competition alongside share price, Maharatna/Navaratna/MiniRatna status and ISO certification.
- The DPE will examine and take the decision on the upgrade with the approval of the finance minister.
- Such a proposal would not be referred to the Cabinet Secretariat and PESB (Public Enterprises Service Board).