A state-owned enterprise in India is called a public sector undertaking—PSU or a public sector enterprise. In a PSU company, most shares, 51% or more, are owned by the central or state government. The ministry of heavy industries and public enterprises administers central public sector enterprises. PSUs are mainly categorized into 3 major ratnas.
- Maharatna Companies
- Navratna Companies
- Miniratna Companies
For a company to be eligible for the Maharatna category has to fulfil these criteria; Three years with an average annual net profit of over Rs. 2500 crore, OR Average annual Net worth of Rs. 10,000 crore for 3 years, OR Average annual Turnover of Rs. 20,000 crore for 3 years (against Rs 25,000 crore prescribed earlier)
Benefits for investment: Rs. 1,000 crore–Rs. 5,000 crore, or free to decide on investments up to 15% of their net worth in a project.
Eligibility: A score of 60 (out of 100), based on six parameters which include net profit, net worth, total workforce cost, the total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest, and Taxes), capital employed, etc., AND A company must first be a Miniratna and have 4 independent directors on its board before it can be made a Navratna.
Benefits for investment: up to Rs. 1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the entire year (not exceeding Rs. 1,000 crores).
Miniratna Companies are further divided into two minor categories:
- Miniratna Category-I
- Miniratna Category-II