Government Owned Business in India
                     Government Owned Business 
in India
Yash Kumar
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Navratna was the title given originally to nine Public Sector Undertaking 
(PSU) companies, identified by the Government of India in 1997 as its 
crown jewels or the most prestigious PSUs, which gave them greater 
autonomy, comparative advantages, and to support them in their drive to 
become global giants. The number of PSUs having Navratna status are 
now 18, the most recent addition being Coal India Limited. PSUs can be 
classified into Navratnas, Mahanavratnas, and Mininavratnas.
Navratnas
The significance of the ‘Navaratna’ status is that it gives the company 
enhanced financial and operational autonomy. The status empowers it to 
invest up to Rs. 1000 crores or 15% of their net worth on a single project 
without seeking government approval. In a year, these companies can 
spend up to 30% of their net worth not exceeding Rs.1000 cr. They will 
also have the freedom to enter joint ventures, form alliances, and float 
subsidiaries abroad. Navratna status is conferred by Department of 
Public Enterprises. To be qualified as a Navratna, the company must 
obtain a score of 60 (of the total 100).
•The score is based on six parameters, which include net profit to net worth, 
total manpower cost to total cost of production or cost of services, PBDIT 
(Profit Before Depreciation, Interest and Taxes) to capital employed, 
PBDIT to turnover, EPS (Earning Per Share) and inter-sectoral 
performance. Additionally, a company must first be a miniratna and must 
have four independent directors on its board before it can be made a 
Navratna. The following as the present 18 Navratna status PSUs
•Bharat Electronics Limited
•Bharat Heavy Electricals Limited
•Bharat Petroleum Corporation Limited
•Coal India Limited
•GAIL (India) Limited
•Hindustan Aeronautics Limited
•Hindustan Petroleum Corporation Limited
•Indian Oil Corporation Limited
•Mahanagar Telephone Nigam Limited
•National Aluminium Company Limited
•NMDC Limited
•NTPC Limited
•Oil & Natural Gas Corporation Limited
•Power Finance Corporation Limited
•Power Grid Corporation of India Limited
•Rural Electrification Corporation Limited
•Shipping Corporation of India Limited
•Steel Authority of India Limited
•Mahanavratnas
•The Government of India has introduced a ‘MahaNavaratna’ status for 
PSUs. Although no PSUs have been conferred this status but this tag 
would allow the state-run firms to make investment decisions of up to Rs 
5,000 crore (Rs 50 billion) without having to go to the government for 
approval.
•PSUs will have to meet the qualifying norm of Rs 30,000 crore or more 
turnover and at least Rs 5,000 crore net profit in the past three years besides an 
average net worth of Rs 15,000 crore. The new tag will give them greater 
autonomy to forge joint ventures, float overseas companies, and the freedom 
to decide on mergers and acquisitions of a particular size
•Miniratnas
•In addition, the Government created another category called Miniratna. 
Miniratnas can also enter into joint ventures, set subsidiary companies and 
overseas offices but with certain conditions.
•Category I Miniratna:
•This designation applies to PSUs that have made profits continuously for the 
last three years or earned a net profit of Rs 30 crores or more in one of the 
three years. These Miniratnas are granted with certain autonomy like incurring 
capital expenditure without government approval up to Rs. 500 crores or equal 
to their net worth, whichever is lower. There are at present 48 Miniratnas 
under category I.
•Category II Miniratna:
•This category include those PSUs which have made profits for the last three 
years continuously and should have a positive net worth. Category II 
Miniratnas have autonomy to incurring the capital expenditure without 
government approval up to Rs. 300 crores or up to 50% of their net worth 
whichever is lower. There are in all 14 PSUs under category II of Miniratna.
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