Maharatna, Navratna and Miniratna PSUs Explained

Maharatna is the highest grade in India’s classification of profit-making central public sector enterprises (CPSEs), which also includes the Navratna and Miniratna categories, and it gives the largest CPSEs greater financial and managerial autonomy than ordinary public sector undertakings. The Government of India introduced the Navratna and Miniratna categories in 1997 and added the Maharatna category in 2010 so that efficient state-owned companies could invest, expand and compete with less dependence on government approval.

The classification is administered by the Department of Public Enterprises (DPE) through published guidelines that set eligibility criteria and delegated powers for each grade. It is a policy scheme and not a law passed by Parliament, so the thresholds are periodically reviewed. This explainer covers the three grades, the eligibility conditions, the powers that come with each status and well-known examples.

Key Takeaways

• Maharatna, Navratna and Miniratna are grades of central public sector enterprises that are awarded by the Government of India to profit-making companies with strong performance.
• Maharatna is the highest grade and requires Navratna status, listing on an Indian stock exchange, and a significant global presence along with high turnover, net worth and net profit.
• A Maharatna company can invest up to Rs 5,000 crore or 15 per cent of its net worth in a single project without separate government approval, within an overall limit of 30 per cent of net worth in a year.
• Navratna and Miniratna categories were introduced in 1997, and the Maharatna category was added in 2010.
• Miniratna Category I and Category II differ in profit history and in the size of investment decisions that their boards can take on their own.
• ONGC, IOC, NTPC, SAIL, BHEL and GAIL are among the best-known Maharatna companies in India.

What are Maharatna, Navratna and Miniratna companies?

Maharatna, Navratna and Miniratna companies are central public sector enterprises that the Government of India has granted special status for good financial performance, giving their boards more power to make investment and operational decisions. The three words are Sanskrit-derived terms: “Maha” means great, “Nav” means nine and “Mini” means small, while “ratna” means jewel.

A central public sector enterprise is a company in which the Central Government or other CPSEs hold at least 51 per cent of the equity. Such companies earlier needed ministry or Cabinet approval for large investments, joint ventures and overseas acquisitions. The ratna scheme gradually delegated these decisions to boards of directors in exchange for demonstrated performance.

The scheme is meant to make state-owned enterprises more competitive with private firms. It rewards commercial performance, encourages listing and ties accountability to memoranda of understanding (MoUs) signed between each CPSE and its administrative ministry.

Why were Navratna, Miniratna and Maharatna statuses created?

The statuses were created to give profitable public sector companies the freedom to take commercial decisions quickly, because the earlier approval process was slow and limited their ability to compete after the economic reforms of 1991. After liberalisation, Indian CPSEs faced domestic private rivals and global competition, and the government wanted to reduce procedural delay.

The scheme developed in stages.

• 1997: the Government announced the Navratna scheme, initially for nine leading enterprises, and the Miniratna scheme for smaller profitable companies.
• 2010: the Maharatna scheme was introduced for the largest and most diversified CPSEs, with higher thresholds and larger investment powers.
• Later years: the Government revised the guidelines on turnover, profit, MoU rating and investment limits, and the number of companies in each grade has changed as new enterprises qualified.

The Government has also used the scheme to encourage CPSEs to list on stock exchanges, because listing brings market discipline and wider disclosure.

What are the three grades of the ratna scheme?

The ratna scheme has three main grades, with Maharatna at the top, Navratna in the middle and Miniratna at the base, and Miniratna is subdivided into Category I and Category II. Each higher grade offers wider financial powers and demands stronger performance.

CPSEs also carry a separate classification into Schedules A, B, C and D, which relates to the size of the enterprise and decides pay scales and board composition. The ratna status is therefore a performance-based label in addition to the schedule category.

What are the eligibility criteria for Maharatna status?

The eligibility criteria for Maharatna status require that a CPSE already has Navratna status, is listed on an Indian stock exchange with the minimum public shareholding prescribed by SEBI, and has a significant global presence or international operations. In addition, the company must meet high average thresholds over the preceding three years.

• Existing status: Navratna status.
• Listing: listed on the Indian stock exchanges with minimum prescribed public shareholding under SEBI regulations.
• Turnover: an average annual turnover of more than Rs 25,000 crore during the preceding three years.
• Net worth: an average annual net worth of more than Rs 15,000 crore during the preceding three years.
• Net profit: an average annual net profit after tax of more than Rs 5,000 crore during the preceding three years.
• Global presence: a significant global footprint or international operations.

The government grants Maharatna status after considering these conditions together with an overall performance record, and the final decision is taken by the competent authority of the Government as specified in the guidelines.

What are the eligibility criteria for Navratna status?

The eligibility criteria for Navratna status require that a CPSE is already a Miniratna Category I or Schedule A company with excellent or very good MoU ratings in at least three of the last five years and a composite score of 60 or more on six performance parameters. The parameters assess profitability, efficiency and market performance.

A composite score of at least 60 out of 100 is required to qualify. A Navratna company must also meet the other conditions set in the DPE guidelines, such as the board composition and governance requirements.

What are the eligibility criteria for Miniratna Category I and II?

Miniratna status is available to CPSEs that have shown consistent profitability, have positive net worth and have not defaulted on repayment of loans or interest, with Category I having stricter profit conditions than Category II. These companies must also not depend on budgetary support or government guarantees for their operations.

Miniratna Category I

• Profit-making in each of the last three years.
• Pre-tax profit of Rs 30 crore or more in at least one of those three years.
• Positive net worth.
• No default in repayment of loans or interest to the Government or banks.
• No dependence on budgetary support or government guarantees.

Miniratna Category II

• Profit-making in each of the last three years.
• Positive net worth.
• No default in loan repayment and no dependence on budgetary support or guarantees.

In both categories, the MoU rating and other conditions in the DPE guidelines also apply, and the Government may withdraw the status if performance deteriorates.

What powers do Maharatna, Navratna and Miniratna companies get?

The powers of ratna companies are delegated financial and managerial powers that allow the board to approve investments, joint ventures, mergers and overseas expansion without prior government sanction, within limits that rise with the grade. The limits below describe the scheme as laid down in the guidelines and may be revised by the Government.

Beyond investment limits, ratna companies typically gain powers to do the following within the prescribed limits.

• Set up joint ventures and wholly owned subsidiaries in India and abroad.
• Acquire companies and assets, and undertake mergers or restructuring.
• Raise capital from domestic and international markets within regulatory limits.
• Decide on technology tie-ups, capital expenditure and organisational changes.
• Delegate powers to the board and management for faster decisions.

Ratna status does not reduce the Government’s shareholding or give companies the right to ignore audit and oversight. CPSEs remain subject to scrutiny by the Comptroller and Auditor General (CAG), the Central Vigilance Commission, the Right to Information Act, 2005, and parliamentary committees.

Which companies are Maharatna PSUs?

Maharatna PSUs are the largest profit-making CPSEs, and well-known examples include Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), NTPC Limited, Steel Authority of India Limited (SAIL), Bharat Heavy Electricals Limited (BHEL) and GAIL (India) Limited. The first group of companies received the status from 2010 onward, and the list has expanded as other large enterprises met the criteria.

The Government publishes the current list of Maharatna, Navratna and Miniratna companies through the DPE, and the membership of each grade changes over time. Readers who need the current roster should consult the latest DPE notification.

Which companies are Navratna and Miniratna PSUs?

Navratna and Miniratna PSUs are mid-sized and smaller profit-making CPSEs, such as Bharat Electronics Limited, Container Corporation of India, NMDC and NLC India in the Navratna category, and IRCTC, RITES and IRCON in the Miniratna category. These companies operate in sectors including defence electronics, logistics, mining, power, railways and engineering services.

The grade of a company can change. A Miniratna may be promoted to Navratna after it meets the performance score and MoU conditions, and a Navratna may later become Maharatna when it crosses the higher thresholds and lists on an Indian exchange. Equally, status can be lost if profit or ratings decline.

How are ratna statuses granted and monitored?

Ratna statuses are granted by the Government of India on the recommendation of the administrative ministry and the DPE after checking a company against the published criteria, and they are monitored through the annual MoU system. Under the MoU, each CPSE agrees with its ministry on targets for financial, operational and social goals, and a performance rating is given at the end of the year.

The MoU rating is classified into categories such as excellent, very good, good, fair and poor. Navratna eligibility depends on obtaining excellent or very good ratings in three of the last five years. A poor rating can delay promotion and may lead to a review of existing status.

The administrative ministry also appoints government directors and, for listed CPSEs, the Securities and Exchange Board of India (SEBI) regulations on disclosure and governance apply. Together, these requirements link autonomy to accountability.

What is the significance and criticism of the ratna scheme?

The significance of the ratna scheme lies in letting efficient public sector companies make commercial decisions faster, and supporters credit it with encouraging overseas investment, capacity expansion and better governance. Many of the largest Indian companies by market capitalisation and profit are Maharatna or Navratna CPSEs, especially in energy, power and heavy engineering.

Observers also raise concerns. The scheme rewards size and profit, which may favour enterprises with market dominance in regulated sectors, and it does not by itself address strategic or social roles that some CPSEs perform. Critics argue that the Government continues to influence board decisions through majority ownership, so true autonomy is limited. Supporters answer that the scheme is a gradual delegation of power with safeguards, and that continued oversight is appropriate for public money.

The scheme operates alongside other policies on public enterprises, including disinvestment, strategic sales and asset monetisation, which together shape how state-owned companies are managed.

Bottom Line

Maharatna, Navratna and Miniratna are performance-linked grades that give profit-making central public sector enterprises more freedom to invest and expand. Maharatna is the top grade with the largest powers, followed by Navratna and the two Miniratna categories. The criteria and limits are set by DPE guidelines rather than by statute, so they can change, but the underlying idea of tying autonomy to commercial performance has remained constant since 1997.

Frequently Asked Questions

What is a Maharatna company in India?

A Maharatna company is a top-tier central public sector enterprise that has been granted the highest level of financial and managerial autonomy by the Government of India. It must be a Navratna company, listed on an Indian stock exchange, and meet high thresholds of turnover, net worth, net profit and global presence. Examples include ONGC, IOC, NTPC, SAIL, BHEL and GAIL.

What is the difference between Maharatna, Navratna and Miniratna?

The difference lies in the level of performance required and the size of investment powers granted. Maharatna is the highest grade with a limit of Rs 5,000 crore or 15 per cent of net worth for a single project, Navratna is the middle grade with a lower limit, and Miniratna is the entry grade, divided into Category I and Category II. Each higher grade needs stronger financial results and a better MoU record.

When were Maharatna, Navratna and Miniratna statuses introduced?

The Navratna and Miniratna categories were introduced in 1997, and the Maharatna category was introduced in 2010. The Department of Public Enterprises issued the guidelines. The thresholds and powers have been reviewed from time to time since then.

What are the financial criteria for Maharatna status?

A company needs an average annual turnover above Rs 25,000 crore, an average annual net worth above Rs 15,000 crore and an average annual net profit after tax above Rs 5,000 crore over the preceding three years. It must also hold Navratna status, be listed with the prescribed public shareholding, and have a significant global presence. These conditions are laid down in the DPE guidelines.

Is Miniratna status given to loss-making companies?

No, Miniratna status is given only to CPSEs that have earned profits in each of the last three years and have positive net worth. Category I also requires a pre-tax profit of Rs 30 crore or more in at least one of those years. The company must not have defaulted on loans or depend on budgetary support or government guarantees.

Does ratna status mean a company is privatised?

No, ratna status does not mean privatisation, because the Government continues to hold majority ownership of the company. The status only gives the board more freedom to take investment and operational decisions within set limits. The company remains subject to audit by the CAG, vigilance rules and parliamentary scrutiny.

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