Policy review on granting PSUs special status

The department of public enterprises (DPE) has decided to review the criteria companies have to fulfill to qualify for 'ratna' status.

This has held up the power ministry's proposal to provide greater autonomy to Power Grid Corporation of India Ltd (PGCIL), Power Finance Corporation (PFC) and National Hydroelectric Power Corporation (NHPC).

The DPE decided to go in for a review, at a meeting yesterday, as some of the companies that had qualified for preferential status had a fairly low turnover.

Navratna or mini-ratna status for public sector units assures them greater autonomy.

The government was considering granting additional powers to such companies for establishing joint ventures for technology transfers and striking mergers and acquisitions, said officials.

The power ministry had proposed to upgrade PGCIL from a mini-ratna to a navratna company, besides granting ratna status to PFC and NHPC.

The policy for granting special status to profit-making companies was introduced in 1997. Nine public sector companies "" Bharat Heavy Electricals Ltd, GAIL India Ltd, Indian Oil Corporation, Mahanagar Telephone Nigam Ltd , National Thermal Power Corporation, Oil and Natural Gas Corporation and Steel Authority of India Ltd "" that had comparative advantages in their respective fields and the potential to emerge as global players were granted navratna status.

Forty-four companies, which made profits three years in a row and had positive net worth and did not default on repayments to the government, were dubbed mini-ratnas. Twenty-nine companies with a profit before tax of Rs 30 crore or more in at least one of the three years were in Category I, while 15 were in Category II.

These companies were allowed to incur capital expenditure, enter into joint ventures, set up technological and financial alliances and formulate schemes for manpower rationalisation among other things. Navratnas, however, were also allowed to raise debt from domestic and international markets.

Among the proposals to provide them with greater autonomy is one to allow these companies to get post-facto approval from the Cabinet Committee on Economic Affairs (CCEA) for acquisitions, mergers and joint ventures.

They will also be allowed to double their investments in other ventures. They are to be allowed to spend up to 10 per cent of their worth on a single project, as against 5 per cent now.

In case of investment in several projects, they could do so up to an overall cap of 30 per cent of their worth with an upper limit of Rs 1,000 crore.

Also, foreign direct investment will be provided government guarantee if requested and they will not lose ratna status if they seek and receive budgetary support to execute expansion or acquisition plans.

It is also proposed to allow these companies to independently appoint board level officials after informing the government. Freedom to draw up staff hiring plans, including campus recruitment is likely to be given.