Index : 1,286 | 1Yr : -15.7% | 1Mo : +7.3%
Category : Government Policies
Min Investment : 6,678
To increase efficiency of their enterprises, the Government of India has awarded several PSUs a higher degree of financial autonomy. These companies are awarded with extra autonomy to help them compete more efficiently against their peers. This initiative was started in 1997 when a total of 9 PSUs were chosen based on some scores. These companies were termed as 'Navratnas'. The term Navratna is a symbolic combination of 9 precious gems.
To qualify as a Navratna, a PSU needs a score of 60 which is based on different parameters: net profit, net worth, total manpower cost, total cost of production, cost of services, profit before depreciation, interest, taxes and capital employed. In addition, it must be a Miniratna and have 4 independent directors.
After qualifying and being granted the autonomy, Navratnas can commit up to Rs.1000 crores OR 15% of net worth on a single project OR 30% of net worth in 1 year.