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Mini-ratnas: Govt grants autonomy to 97 PSUs

The central government on Friday announced a package of financial and operational autonomy for 97 profit-making non-navratna (nine-jewel) public sector units.

Announcing the decision after a cabinet meeting, Industry Minister Murasoli Maran told the media that the government has divided the 97 enterprises into two categories, depending upon their profits and net worth.

Under Category 1 would be those PSUs which had been making profits for the past three years continuously and whose pre-tax profits were Rs 30 crore or more in at least one of the three years. There would be 48 enterprises under this category.

Under Category 2 would be those PSUs which had been earning a profit for the past three years continuously and have a positive net worth. Besides, the PSUs should not be in default of repayment/interest payment on any government loan. Depending upon any budgetary support or government guarantees, there would be 49 enterprises under this category.

The proposed delegation of authority to the 97 enterprises, which the minister called mini-ratnas (mini-jewels), included the power to incur capital expenditure, to establish joint ventures and subsidiaries in India, to enter into technology joint ventures and strategic alliances, and to structure and implement schemes relating to personnel and human resources management.

The minister said the government had also agreed to make the boards more broad-based by inducting three non-official part-time directors selected by a search committee. The non-official directors would be from finance and management experts, he added.

The directors could also be from among non-government shareholders in case of those enterprises where some disinvestment had taken place.

Maran said the PSUs under Category 1 have been allowed to incur capital expenditure on new projects, modernisation, and purchase of equipment without government approval up to Rs 3 billion, or equal to their net worth, whichever is lower. The current maximum limit is Rs 1 billion for PSUs with a gross block of over Rs 5 billion.

For PSUs in Category 2, the limit has been fixed without government approval up to Rs 1.5 billion or up to 50 per cent of their net worth, whichever is lower.

To establish joint ventures and subsidiaries in India, the equity investment of the PSUs under Category 1 should be limited to Rs 1 billion in any one project, and should not exceed five per cent of the net worth of the PSU in any one project, or 15 per cent of the net worth of the PSU in all joint ventures/subsidiaries put together.

At present, all proposals for joint for PSUs in Category 2, the limit has been fixed at Rs 500 million, in any one project and should not exceed five per cent of the net worth of the PSU in any one project or 15 per cent of the net worth of the PSU in all joint ventures/subsidiaries put together.

The establishment of subsidiaries and opening of offices abroad may be finalised with the concurrence of the administrative ministries.

To enter into technology joint ventures, strategic alliances, and to obtain technology and knowhow by purchase or other arrangements subject, the government will issue guidelines from time to time. At present, the position is not uniform or entirely unambiguous in these matters and many PSUs tend to seek the approval or concurrence of government.

These PSUs have also been allowed to structure and implement schemes relating to personnel and human resource management, training, and voluntary or compulsory retirement schemes.

UNI