The Central Government has granted Navratna status to Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC), making them the 25th and 26th Navratna companies among Central Public Sector Enterprises (CPSEs). This move enhances their financial autonomy, allowing them to make independent investment decisions, form strategic alliances, and expand globally without direct government intervention.
Out of the 12 CPSEs under Indian Railways, all seven listed enterprises now hold Navratna status.
Understanding Navratna Status
What is a Navratna Company?
- Definition: Navratna companies belong to the second tier of central government-owned enterprises, positioned between Maharatna and Miniratna firms.
- Selection Criteria: The classification is based on key financial and operational indicators, including profitability, net worth, earnings, and inter-sectoral performance.
Eligibility Criteria for Navratna Status
- Authority: The Department of Public Enterprises (DPE) under the Ministry of Finance selects CPSEs for Navratna classification.
- Evaluation Parameters: Companies are assessed on six key financial indicators:
- Ratio of net profit to net worth
- Ratio of manpower cost to total production/service cost
- Profit before depreciation, interest, and tax (PBDIT) to capital employed
- Profit before interest and tax (PBIT) to turnover ratio
- Earnings per share
- Inter-sectoral performance
- Weightage: Each indicator carries a different weight, with the highest (25) given to the net profit-to-net worth ratio and the lowest (10) to earnings per share.
- Final Selection: CPSEs must achieve a composite score of at least 60 and secure an ‘Excellent’ or ‘Very Good’ Memorandum of Understanding (MOU) rating in three of the last five years.
Advantages Of Navratna Status
Increased Financial Autonomy:
- Can invest up to ₹1,000 crore or 15% of their net worth in a single project without government approval.
- Ability to make independent financial decisions, enter joint ventures, and form subsidiaries.
Expansion and Competitiveness:
- Can engage in mergers and acquisitions without direct government interference.
- Improved ability to compete with private-sector firms.
Global Market Access:
- Freedom to form strategic international alliances without bureaucratic delays.
- Enhanced financial stability attracts investors and ensures better shareholder returns.
Other Navratna Companies in Indian Railways
Before IRCTC and IRFC, five Indian Railways CPSEs held Navratna status:
- Container Corporation of India (CONCOR): Specializes in multimodal logistics and freight transport.
- Rail Vikas Nigam Ltd (RVNL): Engages in railway infrastructure development.
- RITES Ltd: Provides engineering consultancy services.
- IRCON International Ltd: Constructs railway and highway projects in India and abroad.
- RailTel Corporation of India Ltd: Offers telecommunications and IT solutions, including station surveillance and digital services.
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