Maharatna Status for PSE vs. Navratna Status for PSE

Attribute	Maharatna Status for PSE	Navratna Status for PSE
Number of Companies	10	16
Eligibility Criteria	Minimum average annual turnover of INR 25,000 crore in the last 3 years	Minimum average annual turnover of INR 6,000 crore in the last 3 years
Profitability Criteria	Minimum average annual net profit of INR 5,000 crore in the last 3 years	Minimum average annual net profit of INR 1,000 crore in the last 3 years
Net Worth Criteria	Minimum average annual net worth of INR 15,000 crore in the last 3 years	Minimum average annual net worth of INR 2,500 crore in the last 3 years
Investment Criteria	Minimum investment of INR 1,000 crore in a project	Minimum investment of INR 500 crore in a project
Autonomy	Greater financial and operational autonomy	Relatively lesser financial and operational autonomy
Board Composition	More independent directors on the board	Lesser independent directors on the board

Introduction

Public Sector Enterprises (PSEs) play a crucial role in the economic development of a country. In India, the government has established two prestigious statuses for PSEs - Maharatna and Navratna. These statuses are granted to select PSEs based on their performance, financial strength, and strategic importance. While both statuses provide certain benefits and privileges, there are distinct differences between Maharatna and Navratna status. This article aims to compare and contrast the attributes of Maharatna and Navratna statuses, shedding light on their significance and implications.

Maharatna Status for PSEs

Maharatna status is the highest recognition granted to PSEs in India. Currently, there are only 10 PSEs that hold this prestigious status. To be eligible for Maharatna status, a PSE must fulfill certain criteria:

1. The company must be listed on the Indian stock exchange.
2. It should have an average annual turnover of at least Rs. 25,000 crore in the last three years.
3. The PSE should have an average annual net worth of at least Rs. 15,000 crore in the last three years.
4. It should have an average annual net profit after tax of at least Rs. 5,000 crore in the last three years.
5. The company should have significant global operations or international trade.
6. It should have a significant presence in the core sector of the economy.

Once a PSE is granted Maharatna status, it gains several advantages:

• Enhanced financial autonomy and delegation of powers.
• Freedom to make equity investments in other PSEs without government approval.
• Permission to establish joint ventures, subsidiaries, and undertake mergers and acquisitions without seeking government approval.
• Higher borrowing limits and access to cheaper funds.
• Greater flexibility in human resource management, including the ability to create new posts and offer higher salaries.
• Increased decision-making authority and reduced bureaucratic interference.

Navratna Status for PSEs

Navratna status is the second-highest recognition granted to PSEs in India. Currently, there are 14 PSEs that hold this esteemed status. The eligibility criteria for Navratna status are slightly less stringent compared to Maharatna status:

1. The company must be listed on the Indian stock exchange.
2. It should have an average annual turnover of at least Rs. 6,000 crore in the last three years.
3. The PSE should have an average annual net worth of at least Rs. 2,000 crore in the last three years.
4. It should have an average annual net profit after tax of at least Rs. 300 crore in the last three years.
5. The company should have a significant presence in the core sector of the economy.

Navratna status provides several benefits to the PSEs:

• Enhanced financial autonomy and delegation of powers.
• Permission to make equity investments in other PSEs without government approval.
• Freedom to establish joint ventures, subsidiaries, and undertake mergers and acquisitions without seeking government approval.
• Higher borrowing limits and access to cheaper funds.
• Greater flexibility in human resource management, including the ability to create new posts and offer higher salaries.
• Increased decision-making authority and reduced bureaucratic interference.

Comparison of Maharatna and Navratna Status

While both Maharatna and Navratna statuses provide significant benefits to PSEs, there are some key differences between the two:

• Eligibility Criteria: Maharatna status requires PSEs to have higher turnover, net worth, and net profit after tax compared to Navratna status. This indicates that Maharatna PSEs are generally larger and more financially robust.
• Number of Companies: The number of PSEs holding Maharatna status is limited to 10, while Navratna status is granted to 14 PSEs. This suggests that Maharatna status is more exclusive and harder to achieve.
• Global Operations: Maharatna PSEs are required to have significant global operations or international trade, whereas Navratna PSEs do not have this specific criterion. This implies that Maharatna PSEs have a broader international presence.
• Financial Autonomy: Both Maharatna and Navratna PSEs enjoy enhanced financial autonomy and delegation of powers. However, Maharatna PSEs may have greater financial flexibility due to their larger size and financial strength.
• Borrowing Limits: Maharatna PSEs generally have higher borrowing limits compared to Navratna PSEs. This allows them to access larger funds and undertake more ambitious projects.

Conclusion

Maharatna and Navratna statuses are prestigious recognitions granted to select Public Sector Enterprises in India. While Maharatna status is the highest recognition, Navratna status follows closely behind. Both statuses provide PSEs with enhanced financial autonomy, delegation of powers, and flexibility in decision-making. However, Maharatna PSEs have more stringent eligibility criteria, limited to 10 companies, and are generally larger in size with significant global operations. On the other hand, Navratna PSEs have slightly relaxed eligibility criteria, with 14 companies currently holding this status. Understanding the attributes and implications of Maharatna and Navratna statuses is crucial for assessing the impact and significance of these recognitions on the performance and growth of PSEs in India.