State-owned Shipping Corporation of India (SCI), Oil India Limited (OIL), Container Corporation of India (CONCOR) and Coal India Limited (CIL) have joined the league of navratna public sector units (PSUs) like GAIL and Hindustan Aeronautics Limited (HAL) as the government conferred the navratna status on these PSUs taking the number of navratna PSUs to 20.
The apex committee on navratna PSUs, headed by cabinet secretary KM Chandrasekhar, which met on July 11, had cleared the proposals of the respective ministries to grant the coveted navratna status to the public sector behemoths.
While SCI fulfilled all the requirements to earn the honour, the status was given to OIL, CIL and CONCOR, subject to certain conditions to be met by the PSUs, such as appointing all the directors, secretary, department of public enterprises (DPE), R Bandopadhyay told FE.
Bharat Sanchar Nigam Limited?s (BSNL) search for navratna status continues as the apex committee has sent its proposal back to the inter-ministerial group (IMG) under the secretary, DPE to revisit the proposal.
The navratna status for SCI will help the shipping company speed up its ambitious ship acquisition programme, lined up for the next four years. SCI can now order ships without having to go through the burdensome process of having to get the prior approval of the government.
About two years ago, SCI had unveiled a capital expenditure programme of Rs 15,000 crore for the acquisition of 72 vessels till 2011?this also includes replacement of some of its older vessels. Out of this, it has already spent close to Rs 7,000 crore to buy 28 vessels in the last two years. The balance 44 vessels will be acquired during the next three years, with four of them scheduled to join the SCI fleet within a month.
With the navaratna status, OIL will now be able to go ahead with its mega projects. OIL has already bagged eight exploration blocks(six onshore blocks as operator and two offshore blocks as non-operator) under Nelp-VI round of bidding?the highest number awarded to OIL in a single round of bidding.
In the process, OIL has doubled the number of onshore blocks from 6 to 12, as operators, in a single round. Amongst these blocks, the most prospective block was the Krishna-Godavari Block. OIL operates in six countries overseas. It has two blocks in Libya, with an area of 9797 sq kms. In Iran, OIL has a 20% participating interest (PI) in the Farsi Block.
In Sudan, the construction of the product pipeline has been completed and the same was handed over to the ministry of energy and mines(MEM), Sudan. This pipeline has already started generating revenue. In Gabon, OIL has one block where the first phase of exploration is in progress. Aeromagnetic survey has been completed in this block, and seismic survey will start soon. Drilling in the block is expected next year.
OIL has PI in two on-land blocks in Yemen. The company is also actively pursuing acquisition of companies having a good portfolio of exploration acreages and producing assets.
The navratna status is given to state-run companies that have a good track record in terms of earning profits and productivity.
The navratna club includes the names of PSUs like ONGC, Bhel, MTNL, GAIL, IOC, HPCL, BPCL, NTPC and Sail. In keeping with the promise made in the National Common Minimum Programme (NCMP) that full managerial and commercial autonomy would be devolved to successful profit-making companies operating in a competitive environment, the government has revised and enhanced the powers delegated to the board of directors of Navratna PSEs.
Under the new guidelines, the ceiling on investment to establish financial joint ventures and wholly owned subsidiaries in India or abroad would be 15% of the networth of the navratna PSE with a ceiling of up to Rs 1,000 crore.
The overall ceiling on such investment in all projects put together would be 30% of the networth of the PSE. The board of directors of these PSEs have the powers for mergers and acquisitions, subject to the certain conditions.
Conferring the navratna status on CIL is expected to give a boost to its plans to hit the market with its initial public offer (IPO) soon.
Entering the market with the navaratna status would not only help the government realise better price for CIL shares but would also empower the company with much greater operational flexibility such as the power to approve projects up to Rs 2,000 crore on its own.
The Navaratna status may also lead to modifications to the company’s earlier plan in which it targeted to raise anywhere between Rs 4,000 and Rs 4,500 crore from the market. CIL, at present, has an equity base of Rs 6,316 crore, which is entirely held by the Centre.
The status would give a boost to Concor?s efforts to include shipping companies as part of its value chain for which it had invited global bids from freight forwarding companies and feeder vessel operators.
Concor has a network of more than 57 terminals, offering scheduled and on demand rapid rail and road services between the hinderland and ports, and between major metros. In addition to providing inland transport by rail for containers, it has also expanded its network to cover management of ports, air cargo complexes and establishing cold-chain.
Concor has handled 21,05,266 TEU (twenty foot equivalent unit) during 2006-07 against 19,30,562 TEU in 2005-06.