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Brief About Navratana Status Conferred by Department of Public Enterprises 1

2 The Navratnas of 21st Century

The Navratnasof

21st Century(The Most Precious Public Sector Undertakings of India)

Prof. Avinash Joshi

B.Sc., M.M.S.

First Edition : 2011

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA

Brief About Navratana Status Conferred by Department of Public Enterprises 3

© Author

No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or byany means, electronic, mechanical, photocopying, recording and/or otherwise without the prior writtenpermission of the Author and Publisher.

First Edition : 2011

Published by : Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd.,“Ramdoot”, Dr. Bhalerao Marg, Girgaon, Mumbai - 400 004.Phone: .022-2386 01 70/2386 38 63, Fax: 022-2387 71 78Email: [email protected] Website: www.himpub.com

Branch Offices

New Delhi : “Pooja Apartments”, 4-B, Murari Lal Street, Ansari Road, Darya Ganj,New Delhi - 110 002. Phone: 011-23270392/23278631, Fax: 011-23256286

Nagpur : Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 018.Phone: 0712-2738731/3296733, Telefax: 0712-2721215

Bengaluru : No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands, Madhava Nagar,Race Course Road, Bengaluru - 560 001.Phone: 080-22281541/22385461, Telefax: 080-22286611

Hyderabad : No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham,Kachiguda, Hyderabad - 500 027.Phone: 040-27560041/27550139, Mobile: 09848130433

Chennai : No. 85/50, Bazullah Road, T. Nagar, Chennai - 600 017.Phone: 044-28344020/32463737/42124860

Pune : First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth(Near Prabhat Theatre), Pune - 411 030.Phone: 020-24496323/24496333

Lucknow : Jai Baba Bhavan, Church Road, Near Manas Complex andDr. Awasthi Clinic, Aliganj, Lucknow - 226 024. Phone: 0522-2339329,Mobile:- 09305302158/09415349385/09389593752

Ahmedabad : 114, “SHAIL”, 1st Floor, Opp. Madhu Sudan House,C.G.Road, Navrang Pura, Ahmedabad - 380 009.Phone: 079-26560126, Mobile: 09327324149/09314679413

Ernakulam : 39/104 A, Lakshmi Apartment, Karikkamuri Cross Rd., Ernakulam,Cochin – 622011, Kerala.Phone: 0484-2378012/2378016, Mobile: 09344199799

Bhubaneswar : 5 Station Square, Bhubaneswar (Odisha) - 751 001.Mobile: 09861046007, E-mail: [email protected]

Indore : Kesardeep Avenue Extension, 73, Narayan Bagh, Flat No. 302,IIIrd Floor, Near Humpty Dumpty School, Narayan Bagh,Indore- 452 007(M.P.), Mobile: 09301386468

Kolkata : 108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,Kolkata - 700 010, Mobile: 09910440956

DTP by : HPH Editorial Office, Bhandup (Asmita Pankar)

Printed by : Geetanjali Press Pvt Ltd., Nagpur.

4 The Navratnas of 21st Century

I was fascinated and attracted towards the Navratna companies, when around twoyears back I read about ONGC. I developed a keen interest and read as much about thecompany through websites, Annual Reports, Business Magazines, Newspapers etc. I washighly motivated by the achievements of the company and I wrote an article on ONGC asit was celebrating its Silver Jubilee. Meanwhile I continued the study regarding theother Navratna companies.

Then while surfing on net, coincidentally I read one message posted by a third yearengineering student “I want to know what Navratna companies are? Presently I amstudying in 3rd year and how can I prepare for Navratna companies? What are the booksavailable?” This was an elicit for me to take the decision to write a book on Navratnacompanies of India. Then I did the research about availability of any book which givesprecise information about these companies. Unfortunately even after a thorough surveyI could not find any book on the same.

Meanwhile, recession hit globally in 2008, and there was a scarcity of jobs at corporatelevel. Surprisingly leading CPSE’s and Navratnas were on a big hunt for youngprofessionals. This was a major booster for me to make all the relevant information availableon Navratna companies for our aspiring student friends.

Dear students, I am very much eager to know your opinion, valuable suggestionsabout the book.

Thank you and happy reading!

Avinash JoshiContact No.: (020) 25363596Email: [email protected]: A-7, Pradnyanand Apts.,

Pradnya Park,Near Mahatma Society,Kothrud,Pune – 411 029.

PREFACE

Brief About Navratana Status Conferred by Department of Public Enterprises 5

1. Brief about Navratna Status Conferred by Departmentof Public Enterprises 1-4

2. Bharat Heavy Electricals Limited 5-93. Hindustan Aeronautics Limited 10-164. National Mineral Development Corporation 17-205. Shipping Corporation of India 21-246. Gas Authority of India Limited 25-317. Mahanagar Telephone Nigam Limited 32-358. Bharat Electronics Limited 36-419. Power Finance Corporation 42-46

10. Hindustan Petroleum Corporation Limited 47-5211. National Aluminium Company Limited 53-5512. Indian Oil Corporation 56-6313. Power Grid Corporation Limited 64-6714. National Thermal Power Corporation 68-7315. Steel Authority of India Limited 74-7916. Coal India Limited 80-8417. Bharat Petroleum Corporation Limited 85-8918. Rural Electrification Corporation 90-9419. Oil India Limited 95-9620. Oil and Natural Gas Corporation 97-10521. References 10622. Abbreviations 107-108

CONTENTS

6 The Navratnas of 21st Century

BRIEF ABOUT NAVRATNA STATUSCONFERRED BY DEPARTMENT OF

PUBLIC ENTERPRISES

1

From last thousands of years ‘Navratnas’ are considered to be precision gemstones in India.These Navratnas represent nine planets in astrology.

It is believed that these Navratnas bring a good fortune through its favorable influence in ourlife.

The roots of this concept are found in ‘Brihat Jataka’ an ancient text of astrology written byVarahamihira in 505-507. In Sanskrit he says-

“Manikyam dinanayakshya vimalam muktaphalam, shitagoh maheyashya cha vidrumanmarakatam saumyashya-garutmakam, devejyashya cha pushparagam sura-archyashya vajram shanehnilam, niramalman ya yoshchya gadite gomedh – Vaiduryake”. The meaning of this is as follows-

The sun’s gem is pure ruby. Moon is (natural) pearl, Mars is red coral, mercury is emerald,Jupiter is yellow sapphire, Venus is diamond, Saturn is blue sapphire, Rahu is hessonite, and Ketu isCat’s eye.

Vikramaditya had nine extraordinary people (Navratnas) during his reign. They wereDhanvantari, Kshyapanak, Shaku, Amarsimha, Vetal Bhatt, Ghatkarpoor, Varahamihira, Varachi,and Kalidasa. Similarly in the court of Akbar, nine Navratnas were Birbal, Abul-Fazl, Faizi, MiyanTansen, Raja Todarmal, Raja Man Singh, Abdul Rahim Khan-I-Khara, Fakir Aziao-Din, and MullaDo Piaza.

Similarly the term ‘Navratnas’ is coined for the most precious public sector organizations inIndia. These organizations have revolutionized the industrial growth in different sectors with respectto Indian Economy. These Navratnas have been contributing towards the dream of self reliance intheir respective sectors. The main objective of the Govt. behind the concept of offering ‘Navratna’status to selected PSU’s to encourage them to become global giants.

The Govt of India under Common Minimum Programme identified a group of public sectorcompanies having competitive advantage of becoming global giants. The Govt introduced draftguidelines on 22nd July, 1997 to enhance the autonomy and delegation of powers to these organizations.

Brief About Navratana Status Conferred by Department of Public Enterprises 7

The powers presently delegated to the Boards of Navratna CPSEs according to Department ofPublic Enterprises are as below –

(i) Capital Expenditure: The Navratna CPSEs has the power to incur capital expenditureon purchase of new items or for replacement without any monitory ceiling.

(ii) Technology Joint Ventures and Strategic Alliances: The Navratna CPSEs have thepower to enter into technology joint ventures or strategic alliances and obtain by purchaseor other arrangements, technology and know-how.

(iii) Organization Restructuring: The CPSEs have the powers to effect the organizationalrestructuring including establishments of profit centers, opening of offices in India andabroad, creating new activity centers, etc.

(iv) Human Resource Management: The Navratna CPSEs have been empowered to createand wind up all the posts up to non Board level Directors and make all appointments uptothis level. The Board of these CPSEs has further been empowered to effect internaltransfers, re-designation of posts.

(v) Resource Mobilization: The CPSEs have been empowered to raise debt from the domesticcapital markets and borrowings from international markets.

(vi) Joint Ventures and Subsidiaries: The Navratna CPSEs have been delegated powers toestablish financial joint ventures and wholly owned subsidiaries in India or abroad with thestipulation that the equity investment of the CPSE should be limited to the following.(a) Rs. 1,000 Cr. in one project.(b) 15% of the net worth of the CPSE in any one project.(c) 30% of the net worth of the CPSE in all joint ventures/subsidiaries put together.

(vii) Mergers and Acquisitions: The Navratna CPSEs have been delegated power mergersand acquisitions subject to the conditions like it should be as per the growth plan and in thecore area of functioning of CPSE.

(viii) Creation/Disinvestment in Subsidiaries: The Navratna CPSEs have powers to transferassets, float fresh equity, and divest shareholdings in subsidiaries subject to the conditionthat the delegation will be in respect of subsidiary set up by the holding company under thepower delegated to the Navratna CPSE and further to the provision that the public sectorcharacter of the concerned CPSE (including subsidiary) would not be changed withoutprior approval of the Govt. and such Navratna CPSE will be required to seek Govt.approval before exiting from their subsidiaries.

(ix) Tours Abroad of Functional Directors: The Chief Executives of Navratna CPSEshave been delegated powers to approve business tours abroad of functional directors uptofive days duration (other than study tours, seminars, etc.) in emergency under intimationto the secretary of the administrative ministry.

8 The Navratnas of 21st Century

Initially, nine Public Sector Organizations was granted the above autonomy. These organizationswere granted as ‘Navratna’ status. These were BHEL, BPCL, HPCL, IOC, IPCL, NTPC, ONGC,SAIL and VSNL. This is the list conferred by Department of Public Enterprises as Navratnas on22/07/1997.

Gail and MTNL were added into Navratna status on 26/09/1997.

The IPCL, later on was deleted from Navratna status as it was taken over by Reliance PetroInvestments Ltd. (Reliance Industries Group) in 2002. With sale of 26 % equity, the amount realizedto Govt was Rs 1490.84 Cr. Also later, VSNL was privatized and taken over by Pantone Fin VestLtd (TATA Group) in Feb 2002 and was removed from Navratna status. The sale of 25 % equitygave Rs 1439.25 Cr to Govt of India.

Later in June 22, 2007 the Govt. awarded the Navratna status to three more PSUs viz., BEL,HAL and Power Finance Corporation. The other members who received Navratna status are CoalIndia, Indian Oil Corporation, NALCO, NMDC, Power Grid Corporation, Rural ElectrificationCorporation and Shipping Corporation of India and Oil India Ltd.

So at the end of April 2010, following is the list of 19 Navratna Companies:

(1) BHEL (2) BPCL(3) HPCL (4) IOC(5) NTPC (6) ONGC(7) SAIL (8) GAIL(9) MTNL (10) BEL

(11) HAL (12) PFC(13) COAL India (14) NALCO(15) NMDC (16) Power Grid Corporation(17) REC (18) Shipping Corporation of India.(19) Oil India Ltd.

At the time of publishing this book, the Department of Public Enterprises has announced the‘Maharashtra Status’ to five blse chip companies. These companies are ONGC, SAIL, NTPC, IOCand COAL INDIA LTD. with this ‘Maharastra Status’, then companies receive greter functionalfreedom. They can take investment decision of up to Rs. 5,000 Crore without going to government.

The Criterias for Selection of Navratna PSUs

Department of Public Enterprises has set some basic criteria for a PSU to become a NavratnaOrganization.

Brief About Navratana Status Conferred by Department of Public Enterprises 9

These are as follows:

(1) The company must obtain a score of 60 out of 100. This score is based on six parameters.(a) Net profit to net worth(b) Total manpower cost to total cost of production of cost of services(c) Profit before depreciation, Interest and Taxes (PBDIT) to capital employed(d) PBDIT to turnover(e) Earning Per Share(f) Inter Sectoral Performance

(2) The company must obtain ‘Excellent’ or ‘Very Good’ rating in 3 of the last 5 years.(3) The company must obtain a ‘Miniratna’ status before it applies for Navratna status.(4) The company must have four independent directors on its board.