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Govt accords Maharatna status to Power Finance Corporation What is a Maharatna Co.? – Free PDF

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Government accords ‘Maharatna’ status to Power Finance Corporation

Government of India accorded the prestigious ‘Maharatna’ status  to state-owned Power Finance Corporation, thus giving PFC greater  operational and financial autonomy.

What is PFC

  • Power Finance Corporation was incorporated in 1986.
  • It is the largest infrastructure finance company which is dedicated to the power sector under the administrative control of the Ministry of Power.

Why PFC has been granted ‘Maharatna’ status?

  • The the company has received ‘Maharatna’ status because of its exceptional financial performance during the past 3 years.
  • Despite COVID-19, the company witnessed the highest-ever annual sanctions and the disbursement to the power sector to the tune of Rs. 1.66 lakh crores and Rs. 88,300 crores during 2020-21, and the highest-ever profit of Rs. 8,444 crores in FU 2020-21.

Benefits of Maharatna Status

  • The grant of Maharatna status to Power Finance Corporation will impart enhanced powers to the board of PFC while taking the financial decisions.
  • The new recognition will enable Power Finance Corporation to offer competitive financing for the power sector.

Impact of Maharatna Status:

  • It will go a long way in making available affordable and reliable ‘Power for All 24×7”.
  • With the enhanced power of Maharatna, PFC will be able to diversify its operations to further accelerate its business growth going forward and leverage the position for achieving the government’s objectives for the overall development of the power sector.
  • Maharatna’ status allows state-run firms greater financial autonomy — they can decide on investments of up to 15% of their net worth in a project without government approval.
  • The Board of Mahartna CPSE (Central Public Sector Enterprises) can make the equity investments to undertake the financial joint ventures and the wholly-owned subsidiaries.
  • It can also undertake mergers and acquisitions in India and abroad, subject to a ceiling of 15% of the net worth of the concerned CPSE, limited to Rs. 5,000 crores in one project.
  • The board is also able to structure and implement the schemes related to personnel and human resource management and training.
  • They can also enter into technology joint ventures and other strategic alliances.

Categorization of Central Public Sector Enterprises (CPSEs) in India:

  • The Government of India categorizes Central Public Sector Enterprises (CPSEs) under three different categories – Maharatna, Navratna, and Miniratna.
  • These categorizations are based on different criteria.

Maharatna Companies:

  • Maharatna Scheme was introduced for Central Public Sector Enterprises (CPSEs), with effect from 19th May, 2010, in order to empower mega CPSEs to expand their operations and emerge as global giants.
  • The objective of the scheme is to delegate enhanced powers to the Boards of identified large-sized Navratna CPSEs so as to facilitate expansion of their operations, both in domestic as well as global markets.

Procedure for granting Maharatna Status:

  • The proposal(s) for grant of Maharatna status should be initiated by the concerned Administrative Ministries/Departments (after approval of their Financial Advisors and Ministers-in-charge) to the Department of Public Enterprises (DPE).
  • DPE would process the proposal(s) for consideration of the Inter-Ministerial Committee (IMC).
  • After the consideration by the IMC, the proposal would be processed for consideration of the Apex Committee headed by the Cabinet Secretary.
  • The recommendations of the Apex Committee for grant of Maharatna status would be placed before the Minister of Heavy Industries and Public Enterprises for a decision.

Member of  IMC

  • Secretary, Department of Public Enterprises  (Chairman)
  • Secretary, Department of Expenditure
  • Secretary, Planning Commission
  • Secretary of the concerned Administrative Ministry/Department

Member of Apex committee

  • Cabinet Secretary (Chairman)
  • Secretary, Department of Public Enterprises (Member-Secretary)
  • Secretary, Department of Expenditure
  • Secretary, Planning Commission
  • Secretary of the concerned Administrative Ministry/Department

Eligibility Criteria

  • Must have a Navratna status
  • Must be listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations
  • An average annual net profit after tax of more than Rs. 5,000 crore during the last 3 years
  • Average annual Turnover of Rs. 25,000 crore for 3 years, or
  • The average annual Net worth of Rs. 15,000 crore for 3 years
  • Must bear global presence/international operations

Benefits for Investments

  • Rs. 1,000 crore – Rs. 5,000 crore, or free to decide on investments up to 15% of their net worth in a project.

List of Maharatna Companies in India:

  1. Bharat Heavy Electricals Limited (BHEL)
  2. Bharat Petroleum Corporation Limited (BPCL)
  3. Coal India Limited (CIL)
  4. Gas Authority of India Limited (GAIL)
  5. Hindustan Petroleum Corporation Limited (HPCL)
  6. Indian Oil Corporation Limited (IOCL)
  7. National Thermal Power Corporation (NTPC)
  8. Oil and Natural gas Corporation (ONGC)
  9. Power Grid Corporation of India
  10. Steel Authority of India Limited (SAIL)
  11. Power Finance Corporation (PFC)

Criteria for grant of Navratna status:

  • The Miniratna Category – I and Schedule ‘A’ CPSEs, which have obtained ‘excellent’ or ‘very good’ rating under the Memorandum of Understanding system in three of the last five years, and have composite score of 60 or above in the six selected performance parameters, namely,
  • net profit to net worth
  • manpower cost to total cost of production/services
  • profit before depreciation, interest and taxes to capital employed
  • profit before interest and taxes to turnover.
  • earning per share
  • inter-sectoral performance
  • The CPSEs which have made profits in the last three years continuously and have positive net worth are eligible to be considered for grant of Miniratna status.

 

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