Master10
Business, Corporate Governance & Startups Module

Maharatna PSUs, CPSEs & Industrial Conglomerates

Central Public Sector Enterprises (CPSEs) play a pivotal role in industrial infrastructure, energy security, and capital formation in the Indian economy. To enhance operational flexibility and global competitiveness, the Government of India introduced graded tiers of managerial and financial autonomy: Maharatna, Navratna, and Miniratna categories. The Maharatna status, instituted in 2010, grants boards the highest autonomy, allowing investments up to ā‚¹5,000 crore or 15 percent of net worth in a single project without prior government approval. Eligibility requires Navratna status, listing on an Indian stock exchange, and meeting specific average annual turnover, net worth, and net profit thresholds over three consecutive years. Prominent CPSEs include ONGC, IOCL, NTPC, BHEL, Coal India, and Power Grid Corporation.

Key Concepts & Examination Highlights

  • The Maharatna scheme was introduced by the Department of Public Enterprises in 2010 to empower mega CPSEs to expand global operations.
  • To qualify for Maharatna status, a CPSE must already hold Navratna status, be listed on an Indian stock exchange, and maintain an average annual net profit after tax of >ā‚¹5,000 crore over 3 years.
  • Maharatna boards can make capital investments of up to ā‚¹5,000 crore (or 15% of their net worth) in a project without Central Government approval.
  • CPSE classification and performance guidelines are administered by the Department of Public Enterprises (DPE) under the Ministry of Finance.
  • Additional financial criteria for Maharatna status include an average annual turnover of over ā‚¹25,000 crore and average annual net worth exceeding ā‚¹15,000 crore over 3 consecutive years.
  • Navratna CPSEs have the financial autonomy to invest up to ā‚¹1,000 crore (or 15% of their net worth) on a single project without prior Cabinet approval.
  • The Navratna scheme was originally introduced in 1997 to identify CPSEs with comparative advantages and support their transition to global champions.
  • Prominent Maharatna CPSEs include ONGC, Indian Oil Corporation (IOCL), NTPC, Steel Authority of India (SAIL), Coal India Limited (CIL), and Bharat Heavy Electricals (BHEL).
  • Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) are leading non-banking financial CPSEs that have achieved Maharatna status.
  • Miniratna Category-I CPSEs have made profits continuously for the last three years with a pre-tax profit of ā‚¹30 crore or more in at least one year and a positive net worth.
  • Miniratna Category-I boards can incur capital expenditure up to ā‚¹500 crore or equal to their net worth, whichever is less, without government approval.
  • Oil India Limited (OIL) was upgraded to Maharatna status in 2023, while ONGC Videsh was elevated to Navratna status.
  • Bharat Petroleum Corporation Limited (BPCL), Gas Authority of India Limited (GAIL), and Hindustan Petroleum Corporation Limited (HPCL) are prominent Maharatna oil and gas CPSEs.
  • Power Grid Corporation of India Limited (POWERGRID) was established in 1989 and achieved Maharatna status in 2019 for managing the national transmission network.
  • Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) are premier defence public sector undertakings operating under Navratna status.
  • Miniratna Category-II CPSEs are enterprises that have shown a continuous profit record for the last three years and have a positive net worth, with financial autonomy up to ā‚¹300 crore.
  • To be eligible for Navratna status, a CPSE must be a Miniratna Category-I company, have an 'Excellent' or 'Very Good' MoU rating in 3 of the last 5 years, and score 60 or above across six performance indicators.
  • The six composite score indicators for Navratna eligibility evaluate net profit to net worth, manpower cost to total cost, PBDIT to capital employed, earnings per share, and inter-sectoral performance.
  • Memorandum of Understanding (MoU) system was introduced in 1986 following the Arjun Sengupta Committee report to establish annual performance commitments between CPSEs and the Government.
  • Heavy Engineering Corporation (HEC) in Ranchi was set up in 1958 with Soviet and Czechoslovak assistance and was historically referred to as the 'Mother of All Industries'.
  • Steel Authority of India Limited (SAIL), incorporated in 1973, manages major integrated steel plants at Bhilai, Rourkela, Durgapur, Bokaro, and Burnpur.
  • NTPC Limited, founded in 1975, is India's largest thermal power producer and achieved Maharatna status as one of the original four companies in 2010.
  • Indian Railway Catering and Tourism Corporation (IRCTC), Rail Vikas Nigam Limited (RVNL), and IRFC are major railway-sector CPSEs holding Navratna status.
  • National Mineral Development Corporation (NMDC), a Navratna CPSE under the Ministry of Steel, is India's largest single producer of iron ore.
  • Central Public Sector Enterprises are broadly categorized into four strategic sectors: Atomic energy/Space/Defence, Transport/Telecommunications, Power/Petroleum/Coal, and Banking/Insurance/Financial services.
  • The Maharatna, Navratna, and Miniratna categorization scheme for Central Public Sector Enterprises (CPSEs) is administered by the Department of Public Enterprises (DPE) under the Ministry of Finance.
  • To achieve Maharatna status, a CPSE must already hold Navratna status, be listed on an Indian stock exchange with prescribed public shareholding, and demonstrate significant global operations.
  • Financial eligibility for Maharatna status requires an average annual turnover exceeding Rs 25,000 crore, average annual net worth above Rs 15,000 crore, and average annual net profit after tax above Rs 5,000 crore over the last three consecutive years.
  • Boards of Maharatna CPSEs have the delegated power to invest up to Rs 5,000 crore or 15% of their net worth (whichever is lower) in a single project without requiring central cabinet approval.
  • As of 2024, India has 13 Maharatna CPSEs: ONGC, IOCL, NTPC, SAIL, BHEL, GAIL, BPCL, HPCL, Power Grid Corporation of India, Coal India Limited, PFC, REC, and Oil India Limited.
  • Oil India Limited (OIL) was elevated to the 13th Maharatna CPSE in August 2023, while ONGC Videsh Limited (OVL) was upgraded to Navratna status.
  • Power Finance Corporation (PFC) was accorded Maharatna status in October 2021, and Rural Electrification Corporation (REC) was elevated to Maharatna status in September 2022.
  • Navratna CPSEs possess delegated financial autonomy to invest up to Rs 1,000 crore or 15% of their net worth on a single project, or up to 30% of their net worth in a year without government approval.
  • Miniratna Category-I CPSEs must have made profits continuously for the last three years with a pre-tax profit of at least Rs 30 crore in at least one year and have a positive net worth.
  • Miniratna Category-II CPSEs must have made continuous profits for the last three years and maintain a positive net worth, enjoying capital expenditure autonomy up to Rs 300 crore or 50% of net worth.
  • The Standing Conference of Public Enterprises (SCOPE) is the apex professional body representing Central Public Sector Enterprises in India, promoting corporate excellence and managerial autonomy.
  • The CPSE Exchange Traded Fund (CPSE ETF) was launched by the Government of India in 2014 to disinvest stakes in select Maharatna, Navratna, and Miniratna enterprises via mutual fund baskets.
  • The Bharat 22 ETF was launched in 2017 to disinvest government equity across 22 blue-chip CPSEs, public sector banks, and SUUTI (Specified Undertaking of Unit Trust of India) holdings.
  • The Tata Group was founded in 1868 by Jamsetji Nusserwanji Tata as a trading firm in Bombay, establishing the Empress Mills in Nagpur (1877) and the Tata Iron and Steel Company (TISCO) in Jamshedpur (1907).
  • Reliance Industries Limited was founded in 1958 by Dhirubhai Ambani as Reliance Commercial Corporation, expanding into petrochemicals, telecom, retail, and operating the world's largest refining complex at Jamnagar.
  • The Federation of Indian Chambers of Commerce and Industry (FICCI) was established in 1927 on the advice of Mahatma Gandhi by industrialist G.D. Birla and Sir Purshottamdas Thakurdas.
  • The Confederation of Indian Industry (CII) traces its roots to the Engineering and Iron Trades Association (EITA) founded in 1895 in Calcutta, representing over 9,000 member enterprises.
  • The Associated Chambers of Commerce and Industry of India (ASSOCHAM) was established in 1920 by chamber representatives from Calcutta, Bombay, and Madras to represent pan-Indian commercial interests.
  • The National Stock Exchange's NIFTY CPSE Index tracks the performance of selected Central Public Sector Enterprises where the Government of India holds significant equity.
  • Steel Authority of India Limited (SAIL) was incorporated in 1973 to manage integrated steel plants at Bhilai, Rourkela, Durgapur, Bokaro, and Burnpur under a single state-owned holding structure.
  • NTPC Limited, originally the National Thermal Power Corporation founded in 1975, is India's largest power-generating utility with an installed capacity exceeding 70 GW.
  • Coal India Limited (CIL), established in 1975 following coal nationalization, is the single largest coal producer in the world, operating across eight subsidiary companies.
  • Oil and Natural Gas Corporation (ONGC) was established as a statutory commission in 1956 under the stewardship of K.D. Malaviya, discovering India's major oilfields including Mumbai High.
  • Hindustan Aeronautics Limited (HAL) is a premier aerospace Navratna CPSE founded in 1940 by Walchand Hirachand as Hindustan Aircraft in Bangalore, nationalized in 1964.
  • Bharat Electronics Limited (BEL) is a defence electronics Navratna CPSE established in Bangalore in 1954 under the Ministry of Defence to manufacture radar and communication equipment.
Curriculum & Reference Sources: Department of Public Enterprises (DPE), Ministry of Finance, Annual Public Sector Enterprises Survey.

Sample Solved Questions & Concept Explanations

8 Verified Concept Questions
Q1.EASY

Which category represents the highest tier of operational and financial autonomy granted by the Government of India to premier Central Public Sector Enterprises (CPSEs)?

Q2.MEDIUM

The boards of 'Maharatna' Central Public Sector Enterprises (CPSEs) are empowered to make capital investments in a single project without prior Union Cabinet approval up to what financial ceiling?

Q3.HARD

To be eligible for the grant of 'Maharatna' status, a Central Public Sector Enterprise (CPSE) must have recorded an average annual net profit after tax during the last 3 consecutive years of at least what amount?

Q4.EASY

Who is universally revered as the 'Father of Indian Industry' for founding the Tata Group and establishing Empress Mills in Nagpur in 1877?

Q5.EASY

In which year was the Tata Iron and Steel Company (TISCO, now Tata Steel) incorporated, setting up Asia's first integrated private steel plant in Sakchi (Jamshedpur)?

Q6.EASY

Which of the following represents the correct hierarchical order (highest to lowest operational autonomy) of CPSE categories in India?

Q7.EASY

Which iconic textile brand was launched in 1975 by Dhirubhai Ambani, marking the foundation of Reliance Industries' rapid corporate growth?

Q8.EASY

Headquartered in Kolkata, which Maharatna CPSE is the single largest coal-producing company in the world?