RVNL is now a Navratna company – what does it mean?

Advertisement
RVNL is now a Navratna company – what does it mean?
Source: Pixabay
  • The Navratna companies are CPSE units that have been granted financial autonomy to invest up to ₹1,000 crore without seeking approval from the central government.
  • This increased financial freedom gives Navratna companies a competitive edge when competing globally.
  • A Navratna company is upgraded to a Maharatna company when it fulfils the required eligibility criteria.
Advertisement
The Ministry of Finance elevated Rail Vikas Nigam Limited (RVNL) to the status of a Navratna Central Public Sector Enterprise (CPSE) on Wednesday. RVNL, a public-sector railway company, has already been on investors’ radar recently because of a strong rally in the stock led by robust orders.

Let us take a look at what it means to be a Navratna CPSE. The term ‘Navratna’ refers to a select group of top-performing CPSEs that have been granted greater autonomy and financial powers by the Indian government in recognition of their superior performance.

The term ‘Navratna’, meaning nine gems, is used metaphorically to suggest that these companies are like the nine precious gems that shine brightly in the crown of Indian PSEs.

With RVNL added to the list, there are 13 Navratna companies

The Navratna status was first granted to nine public sector enterprises in 1997 by the Indian government. Since then, a few more enterprises were added to this exclusive group based on their performance and on meeting the eligibility criteria. Currently there are 13 Navratnas, including RVNL. These are:

Advertisement

  1. Shipping Corporation of India (SCI)
  2. Hindustan Aeronautics Limited (HAL)
  3. Rashtriya Ispat Nigam Limited (RINL)
  4. Engineers India Limited (EIL)
  5. NMDC Limited
  6. Bharat Electronics Limited (BHEL)
  7. National Buildings Construction Corporation (NBCC)
  8. Oil India Limited (OIL)
  9. Mahanagar Telephone Nigam Limited (MTNL)
  10. Container Corporation of India (CONCOR)
  11. National Aluminium Company (NALCO)
  12. NLC India Limited (NLCIL)
The number of Navratnas went as high as 14 but since two companies were elevated to the status of a Maharatna – Rural Electrification Corporation (REC) in September 2022 and Power Finance Corporation (PFC) in October 2022 – the number of Navratnas now stands at 13, including RVNL.

The ‘Ratnas’ of the Indian public sector

CPSE units are categorised as Maharatna, Navratna and Miniratnas.

Navratna: First, let us look at the Navratna companies. Normally, a CPSE requires permission from the Indian government to invest a large sum of money in a project or a deal. The Navratna companies are CPSE companies that have been granted financial independence to invest up to ₹1,000 crore without seeking approval from the central government. Navratna companies are also allowed to invest up to 15% of their net worth on a single project, or 30% of their net worth in a given year, subject to a cap of ₹1,000 crore. This increased financial freedom gives Navratna companies a competitive edge when competing globally.

Maharatna: To be granted "Maharatna" status, a company must meet certain eligibility criteria. This includes recording a net profit of more than ₹5,000 crore for three consecutive years, maintaining an average annual turnover of over ₹25,000 crore for three years, or having an average annual net worth of over ₹15,000 crore for three years. Additionally, the company must have a global presence or international operations to qualify for this status.

When a Navratna company achieves these criteria, it is upgraded to a Maharatna company. Currently, there are 12 Maharatna companies including Bharat Heavy Electricals Limited (BHEL), Bharat Petroleum Corporation Limited (BPCL), Coal India Limited (CIL), and Gas Authority of India Limited (GAIL).
Advertisement

Miniratna: In India, CPSEs that are eligible for the Miniratna status are those that have a minimum pre-tax profit of ₹30 crore in at least one of the three consecutive years and maintain a positive net worth. Some of the Miniratna companies are Airports Authority of India (AAI), Antrix Corporation Limited (Antrix), Balmer Lawrie & Co. Limited (Bl), and Bharat Coking Coal Limited (BCCL), Miniratna companies are upgraded to Navratna companies when they fulfil the eligibility criteria, just like RVNL.

Jobs at Maharatna, Navaratna and Miniratna companies are in high demand since they pay a handsome salary in addition to providing job security. Also, public sector undertakings (PSUs) are known for taking good care of their employees by providing various benefits such as medical facilities, emergency allowances and sufficient leave options.
{{}}