BHEL and SAIL Maharatna Tag: The two big government companies of the country, BHEL (Bharat Heavy Electricals Ltd) and SAIL (Steel Authority of India Ltd) are in danger of losing their ‘Maharatna’ status. The central government has given one year’s notice to both the companies in view of their poor performance.

Where is the mistake happening?

In the review policy meeting chaired by Cabinet Secretary Dr TV Somanathan, it came to light that both the companies were not able to meet the most important financial criteria of Maharatna.

For any company to remain a Maharatna, the average annual net profit (Profit After Tax-PAT) of the last three years should be more than Rs 5000 crore. On the contrary, out of the total 14 Maharatna companies in the country, BHEL and SAIL are the only companies which are failing to achieve this three-year profit target.

What will happen if ‘Maharatna’ status is snatched away?

If these companies do not improve their profits within a year, they will be downgraded to ‘Navratna’ category. This will reduce the financial autonomy of their boards.

Currently, as Maharatna, both the companies can directly take investment or business decisions up to Rs 5000 crore without government approval. As soon as they become Navratna, their investment limit will be reduced, which will be only Rs 1000 crore. This will affect their big projects.

What is the stance of the government?

This is the first case when a government PSU has been given such a strict warning to withdraw Maharatna status. The Ministry of Heavy Industries and Ministry of Steel have been asked to present a detailed revival plan to improve the performance of these two companies. In this sequence, the government has also tightened the rules of corporate governance. Now the numbers of these companies will also be deducted on rules like not making timely payment to CSR funds and MSME vendors.

Also read:

‘Good news’ for the country after RBI’s decision on repo rate, bumper jump in government treasury after two weeks