State-run Bharat Heavy Electricals Ltd (BHEL) and Steel Authority of India Ltd (SAIL) have been placed under a one-year review period by the Centre after failing to meet the profitability criterion required for Maharatna status, The Economic Times reported on Saturday.
If their financial performance does not improve during the review period, the two public sector undertakings (PSUs) could be downgraded to Navratna status, reducing the autonomy currently available to their boards.
BHEL and SAIL are the only two among India’s 14 Maharatna companies that do not meet the requirement of maintaining an average annual profit after tax (PAT) of more than ₹5,000 crore during the preceding three years. To qualify as a Maharatna, a central public sector enterprise (CPSE) must also have an average annual turnover of more than ₹25,000 crore, net worth exceeding ₹15,000 crore over the previous three years, and a significant international presence.
A downgrade would curtail the companies’ financial powers. Maharatna firms can make equity investments of up to ₹5,000 crore without prior government approval, while the limit for Navratna companies is ₹1,000 crore.
First such review
The recommendation was made by a committee headed by Cabinet Secretary TV Somanathan as part of a broader review of CPSEs, the report added.
The panel reviewed the Maharatna framework and recommended stricter financial and governance standards, including provisions for withdrawing Ratna status from companies that fail to meet prescribed criteria. The ministries overseeing BHEL and SAIL have been asked to submit turnaround plans to improve profitability and overall financial performance.
Eligibility criteria under review
According to the report, the review has also prompted a wider examination of the Maharatna eligibility framework. Representatives of NITI Aayog told the committee that the turnover, net worth and profitability thresholds were fixed in 2010 and have not been revised to reflect current market conditions.
The committee has asked the Department of Public Enterprises (DPE) to revisit the eligibility criteria by indexing them to 2025 prices, after which all CPSEs may be reassessed under the revised framework.
Company-specific concerns
During the review, the Steel Ministry informed the committee that SAIL’s average annual turnover exceeded ₹1 trillion over the last four years, while its average net worth stood at ₹53,976 crore. However, the company last met the three-year average PAT threshold in 2022-23.
In BHEL’s case, NITI Aayog has flagged human resource policies as a major constraint on growth and called for a comprehensive review. The Ministry of Heavy Industries told the panel that a plan had already been put in place to improve the company’s financial performance.
What are Maharatna and Navratna companies?
Maharatna and Navratna are classifications awarded by the Government of India to high-performing CPSEs, granting them varying degrees of financial and operational autonomy.
Maharatna is the highest category of CPSEs and provides greater freedom in investment decisions, joint ventures, acquisitions and overseas expansion. Navratna companies enjoy a lower level of autonomy and operate with comparatively smaller investment limits.
India’s 14 Maharatna companies
Bharat Heavy Electricals Limited (BHEL)
Bharat Petroleum Corporation Limited (BPCL)
Coal India Limited (CIL)
GAIL (India) Limited
Hindustan Aeronautics Limited (HAL)
Hindustan Petroleum Corporation Limited (HPCL)
Indian Oil Corporation Limited (IOCL)
NTPC Limited
Oil and Natural Gas Corporation (ONGC)
Oil India Limited (OIL)
Power Finance Corporation (PFC)
Power Grid Corporation of India Limited (PGCIL)
REC Limited
Steel Authority of India Limited (SAIL)
