Cabinet secretary KM Chandrasekhar has directed the department of public enterprises (DPE) to make the management of central public sector enterprises (CPSEs) compulsorily use the financial and managerial freedom delegated to them. The direction is significant given that Navratna and Miniratna CPSEs are seeking more autonomy from the government.
?I have been looking at CPSEs talking about more autonomy. While excessive interference by the administrative ministry in the nitty-gritty of operation is not called for, there has been reluctance on the part of companies to even exercise the delegated powers. I have asked the DPE to work out a system whereby exercise of delegated powers is made a part of the evaluation process. It should be in-built in the system,? Chandrasekhar told FE .
?There is enough freedom available from the government, but many firms are not utilising the given autonomy to the fullest. The suggestion to evolve a new system, making the use of powers compulsory, was given last month. DPE is working on it,? the cabinet secretary said without naming any CPSE.
The government has allocated autonomy to the management of select CPSEs by conferring miniratna and Navratna status to them. As per DPE guidelines, a Navratna firm can make any amount of capital expenditure, invest upto Rs 1,000 crore in a joint venture (JV) or subsidiary and take decision on restructuring without prior permission of the government. A Miniratna company, on the other hand, can have a capex of up to Rs 500 crore and invest up to Rs 500 crore in a JV or subsidiary besides enjoying other freedom.
With expansion of their operations, many CPSEs?including Navratna firms like Bharat Heavy Electricals Ltd, Steel Authority of India Ltd and Oil & Natural Gas Corporation?are now seeking more freedom from the government. Chandrasekhar is heading a committee of secretaries that is finalising guidelines on allotting higher autonomy by creating a new set of CPSEs, called Maharatna.
?The committee has submitted its report. Some changes have been suggested in the draft guidelines. Now, it is up to DPE to present it for cabinet discussion,? Chandrasekhar said on the sidelines of a conference on resurgence of state-level public enterprises in Kerala.
According to the draft selection criteria for conferring Maharatna status, a Navratna CPSE should be a listed and have international operations. It should have earned average annual turnover of at least Rs 25,000 crore, average net worth of Rs 15,000 crore and average net profit after tax of Rs 5,000 crore in the previous three years. Maharatna firms would be allowed to invest a maximum of Rs 5,000 crore in a JV provided its overall investment in such ventures is not more than 50% of its total net worth.
Out of the 18 Navratna CPSEs, only six firms including Oil & Natural Gas Corporation (ONGC), Steel Authority of India and Indian Oil Corporation would qualify for the Maharatna status.