BHEL, SAIL at risk of losing Maharatna tag

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The government has put public sector undertakings Bharat Heavy Electricals Ltd BHEL ) and Steel Authority of India Ltd SAIL ) on a one-year notice to improve their financial performance, show official documents.If their performance does not improve, these Maharatna companies may be downgraded to the Navratna status.According to an official assessment, BHEL and SAIL do not meet the criteria of having an average annual profit after tax (PAT) of more than ₹5,000 crore during the last three years.These are the only companies among the 14 Maharatnas that failed to meet the required parameters. The other requirements are an average turnover of more than ₹25,000 crore and net worth of over ₹15,000 crore in the preceding three years and "a significant global presence or international operations". The downgrade, if it happens, will lower the autonomy of the company boards. Maharatnas can make equity investments of up to ₹5,000 crore without government approval. For Navratnas, the limit is ₹1,000 crore.This is the first case of Maharatnas being put on notice with the threat of a status downgrade. In both cases, a committee headed by cabinet secretary TV Somanathan made the recommendation.The committee last year conducted a re-evaluation of central public sector enterprises (CPSEs) and recommended several measures to improve their performance, including imposition of stricter financial parameters and tighter corporate governance requirements and having the option of stripping a CPSE of its 'Ratna' status. It reviewed the Maharatna categorisation to revise it with contemporary market dynamics."The Ratna status cannot be taken for granted and any significant deviation from the prescribed criteria will result in downgrade," a senior official told ET.The Centre has already tightened annual performance rules for CPSEs, with strict penalties for failing to meet corporate social responsibility (CSR) obligations, delaying payments to micro, small and medium enterprises (MSMEs) and failing to prepare a succession plan.Any deviation from mandatory CSR activities or MSME procurement rules will result in a full deduction of marks assigned to these performance parameters, according to the parameters to assess the performance of CPSEs in FY27. These parameters are fixed annually.According to Niti Aayog representatives who attended the meetings, the thresholds of turnover, net worth and PAT have been defined in 2010, and "have not been adjusted or revised to reflect the real values."Calling for a wider scrutiny, Somanathan asked the Department of Public Enterprises (DPE) to "rework the criteria of eligibility of government companies to be upgraded to Maharatnas after indexing to 2025 prices to reflect the real prices". A performance review of all public sector companies is then to be carried out by the DPE on the basis of the reworked criteria.The ministries of heavy industries and steel have been instructed to present a detailed plan on how BHEL and SAIL could deal with issues such as weak financial performance including low profitability.During the assessment, the steel ministry informed the panel that SAIL's average annual turnover was more than ₹1 lakh crore for the last four years and its average net worth was ₹53,976 crore. SAIL last met the threshold of ₹5,000 crore average annual PAT for three years in 2022-23.The Niti Aayog observed BHEL's human resource policies as "a major constraint" in its growth and said those required a comprehensive examination. A heavy industries ministry official informed the committee that "a plan has been put in place for improving BHEL's financial performance".