Maharatna

Guidelines on Maharatna Scheme for CPSEs: Download

Feb 9: The Union Ministry of Heavy Industries and Public Enterprises has, recently, issued guidelines on its Maharatna Scheme, which aims at delegating enhanced powers to the Boards of certain identified central public sector enterprises (CPSE), so as to facilitate expansion of their operations, both, in domestic, as well as as global markets. The introduction of this scheme was accepted by the Union Cabinet on December 24, 2009. Pertinently, the procedure for the grant of Maharatna status as well as the conditions for the exercise of delegated powers will be similar to that for the grant of Navratna status. The performance of Maharatna CPSEs would be reviewed annually by an Inter-Ministerial Committee and, thereafter, by the Apex Committee, headed by the Cabinet Secretary, which will recommend continuation or rescindment of Maharatna status. According to the guidelines, the CPSEs meeting the following eligibility criteria will be considered for the 'Maharatna' status:
--Having 'Navratna' status
--Listed on the 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 three years.
--An average annual net worth of more than Rs15,000 crore during the last three years.
--An average annual net profit after tax (PAT) of more than Rs 5,000 crore during the last three years.
--Should have significant global presence or international operations.
8Once conferred Maharatna status, the Boards of Maharatna CPSEs, will have the following powers:
--Incur capital expenditure on purchase of new items or for replacement, without any monetary ceiling.
--Enter into technology joint ventures or strategic alliances.
--Obtain by purchase or other arrangements, technology and know-how.
--Effect organizational restructuring including establishment of profit centers, opening of offices in India/ aboard, creating new activity centers, etc.
--Create below board level posts up to E-9 level and to wind up all below board level posts. The Boards of Directors will have powers to make all appointments, effect internal transfers and re-designation of all below board level posts.
--Structure and implement schemes relating to personnel and human resource management and training.
--Raise debt from the domestic capital markets and from international market, the latter being subject to. the approval of RBI/Department of Economic Affairs, as may be required, and should be obtained through the administrative Ministry.
--Make equity investment to establish financial joint ventures and wholly owned subsidiaries and undertake mergers & acquisitions, in India or abroad, subject to a ceiling of 15 % of the net worth of the concerned CPSE, limited to Rs 5,000 crore in one project. The overall ceiling on such investments in all projects put together will not exceed 30% of the net worth of the concerned CPSE. While normally the investment would be done directly by the parent CPSE, in cases where it proposes to invest through a subsidiary into another joint venture, and also provide the additional capital for this purpose, the above stipulations would be in the context of the parent company.
--The Board of Directors shall have the powers for mergers and acquisitions, subject to the conditions that it should be as per the growth plan and in the core area of functioning of the CPSE and the Cabinet Committee on Economic Affairs (CCEA) would be kept informed in case of investments abroad. Further, the powers related to Mergers and Acquisitions should be exercised in such a manner that it should not lead to any change in the public sector character of the concerned CPSEs.