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Department of Public Enterprises (DPE) has said that Maharanta, Navratna, and Miniratna Central Power PSEs cannot exercise delegated powers in respect of projects of their subsidiaries. At present, there are over 250 CPSEs and out of them, 55 are listed.
This issue came to light when Oil India (OIL) approached the Department of Public Enterprises with a query. It wanted to know whether a Navratna CPSE can approve the projects of NRL (a subsidiary company of OIL) by exercising the power under the Navratna scheme available to OIL. In its response, DPE said that the matter has been examined and it is clarified that the Boards of Maharanta, Navratna, and Miniratna CPSEs have been delegated certain financial and operational powers.
“These delegated powers are to be exercised by the Boards of Maharanta/Navratna/Miniratna CPSEs as the case may be, in respect of projects of concerned CPSEs only and not for their subsidiaries,” it said in a communication dated October 26 while denying OIL to exercise delegated Navratna powers while approving the projects of its subsidiary CPSE(s).
As of date, there are 11 Maharatnas (NTPC, GAIL, ONGC, BHEL, and IOC, among others), 13 Navratna (Hindustan Aeronautics Limited, Shipping Corporation, REC, NMDC, and NBCC, among others), and 74 Miniratnas (Airport Authority, Hindustan Copper, HLL Lifecare, Cochin Shipyards, and Chennai Petroleum, among others). The Government has delegated varying degrees of financial powers to the Boards of CPSEs depending on the size, performance, and profitability of the company. A CPSE can incur capital expenditure up to different limits as per the category of PSU. Grant of enhanced powers includes the power of incurring capital expenditure, joint venture, HR policies, raising capital from domestic and international markets, etc.
Delegated powers
A Maharatna category CPSE has been delegated power to incur capital expenditure on the purchase of new items or for replacement, without any monetary ceiling. It can enter into technology joint ventures or strategic alliances. It is allowed to obtain technology and know-how by purchase or other arrangements. It can raise debt from the domestic capital markets and from the international market, the latter being subject to the approval of RBI/Department of Economic Affairs, as may be required, and should be obtained through the Administrative Ministry. It can also make equity investments to establish financial joint ventures and wholly owned subsidiaries and undertake mergers and acquisitions, in India or abroad, subject to a ceiling of 15 per cent of the net worth of the concerned CPSE, limited to ₹5000 crore in one project.
A Navratna category CPSE has been delegated power very similar to Maharatna but with a lower limit in terms of investment made. For example, such a CPSE can make equity investments to establish financial joint ventures and wholly owned subsidiaries in India or abroad and undertake mergers and acquisitions, in India or abroad, subject to a ceiling of 15 per cent of the net worth with a ceiling of ₹1,000. A Miniratna category gets the enhanced delegated power provided it has not defaulted in the repayment of loans/interest payments on any loans due to the Government.
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