Maharatna status

Also called: Maharatna · Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT

Meaning

Maharatna status is the top grade in the government's "Ratna" system for central public sector enterprises (CPSEs). It is given only to a CPSE that is already a Navratna, is listed on a stock exchange with the minimum public shareholding set by SEBI, has a significant global presence, and meets three 3-year average tests: turnover > Rs 25,000 cr, net worth > Rs 15,000 cr and net profit after tax > Rs 5,000 cr [1].

It matters because the board of a Maharatna gets the most financial, managerial and operational freedom of any CPSE. It can approve projects of up to Rs 5,000 cr or 15% of its net worth, whichever is lower, without asking its ministry each time. This lets India's largest public companies compete with private and global firms.

Board's investment limit per project = the lower of (Rs 5,000 cr, 15% of net worth)

Explanation

Where it sits in the Ratna ladder

• A CPSE is a government company in which the Centre, other CPSEs, or both together hold ≥ 51% of the shares.
• How autonomy grew over time:
• Arjun Sengupta Committee (1984). It looked at how to make public enterprises accountable.
• MoU system (1988). An MoU (Memorandum of Understanding) is a yearly performance agreement between a CPSE and its ministry. At the end of the year the CPSE is rated from "excellent" to "poor".
• Navratna and Miniratna (1997).

• Maharatna (2009-10). This was added as a new top grade above Navratna.

• The ladder, from bottom to top:

Status	Key entry test	Board's investment power (per project)
Miniratna Category II	Profit in each of the last 3 years; positive net worth	Up to Rs 300 cr
Miniratna Category I	As above, plus pre-tax profit ≥ Rs 30 cr in at least one of those years	Up to Rs 500 cr
Navratna	Miniratna Category I and Schedule A; "excellent/very good" MoU rating in 3 of the last 5 years; composite score ≥ 60	Up to Rs 1,000 cr or 15% of net worth
Maharatna	Navratna first, then the tests below	Up to Rs 5,000 cr or 15% of net worth

• Why the ladder works:
• A CPSE earns more freedom by making more profit.
• With more freedom, its board can decide faster.
• Faster decisions help it compete with private and foreign firms, which have had more room since the New Industrial Policy 1991 cut the sectors reserved for the public sector.

The criteria in detail

A CPSE must pass all of these tests [1]:

1. Already a Navratna. A firm cannot jump straight to Maharatna.
2. Listed, meaning its shares trade on a stock exchange, with the minimum public shareholding set by SEBI rules. The public, not only the government, must own some of its shares.
3. 3-year average turnover > Rs 25,000 cr. Turnover is the total value of sales.
4. 3-year average net worth > Rs 15,000 cr. Net worth is what the owners own after all debts are paid, that is, paid-up capital plus reserves.
5. 3-year average net profit after tax > Rs 5,000 cr.
6. Significant global presence. The firm must operate or have interests abroad.

• Why use 3-year averages? One lucky year cannot qualify a firm. It must be large and profitable over a longer period.
• Why require listing? A listed firm is watched by shareholders and the market, and it must follow SEBI's disclosure rules. This brings market discipline in return for the extra freedom.

What the board can do: the investment cap

• The board can approve investment, joint ventures and expansion (including abroad) without the ministry's approval, within a cap per project.
• Read the rule "Rs 5,000 cr or 15% of net worth" as whichever is lower.
• Worked example 1 (large Maharatna):
• Net worth = Rs 40,000 cr.
• 15% of Rs 40,000 cr = Rs 6,000 cr.

• Rs 6,000 cr is above Rs 5,000 cr, so the cap is Rs 5,000 cr per project.

• Worked example 2 (hypothetical smaller Maharatna):

• Net worth = Rs 20,000 cr.
• 15% of Rs 20,000 cr = Rs 3,000 cr.

• Rs 3,000 cr is below Rs 5,000 cr, so the cap is Rs 3,000 cr per project.

• Worked example 3 (hypothetical eligibility check): A Navratna has 3-year averages of turnover Rs 30,000 cr, net worth Rs 12,000 cr and profit after tax Rs 6,000 cr. It passes the turnover and profit tests, but it fails the net worth test (Rs 12,000 cr is not above Rs 15,000 cr). So it cannot become a Maharatna yet.

In India

• Who manages it: the Department of Public Enterprises (DPE) runs the Ratna scheme. Its yearly DPE Public Enterprises Survey counts about 250-270 operating CPSEs; check the latest Survey for the current figure.
• Rule behind it: these are government eligibility criteria announced through PIB, not a separate Act of Parliament [1].
• How many there are:
• An older PIB release counted 7 Maharatna, 16 Navratna and 71 Miniratna CPSEs [1].
• Today there are about 14 Maharatnas (verify on DPE). Examples include IOCL, SAIL, NTPC, ONGC, Coal India, BHEL, GAIL and PFC.

• The jump from 7 to about 14 shows that more CPSEs have become large and profitable enough to qualify.

• Latest addition: HAL (Hindustan Aeronautics Limited) became a Maharatna in October 2024. NCERT still lists it as a Navratna, so it is out of date here. Always check the current lists on DPE.

• Link with policy after 2021: under the New Public Sector Enterprise Policy 2021, the state keeps only a bare-minimum presence of CPSEs in four strategic groups, such as power, petroleum, coal and minerals [2]. Many Maharatnas work in exactly these sectors. So the policy is to keep them public and strong, not to sell them.
• Link with the budget: since 2020-21, CPSE dividend payouts have risen every year [3]. Large, profitable Maharatnas are an important source of these dividends.

Don't confuse with

• Navratna: this is one step below Maharatna. It needs Miniratna Category I and Schedule A status, good MoU ratings and a composite score ≥ 60, but no global-presence test and no turnover > Rs 25,000 cr test. Its board cap is Rs 1,000 cr (or 15% of net worth), against Rs 5,000 cr for a Maharatna.
• Miniratna: this rests only on continuous profit for 3 years and positive net worth [1]. It does not need listing. The caps are fixed amounts (Rs 500 cr for Category I, Rs 300 cr for Category II), with no "15% of net worth" option.
• MoU system (1988): this is a yearly performance contract signed by every CPSE with its ministry. Ratna status is a lasting grade of autonomy. The MoU rating is one input into Navratna status. It is not a Ratna category itself.
• Disinvestment / privatisation: these reduce the state's ownership. Ratna status keeps state ownership (≥ 51%) and only gives the board more freedom. The listing that a Maharatna needs does involve selling some shares, but the state keeps control.

Prelims Hooks

• Order of events: Arjun Sengupta Committee 1984 → MoU 1988 → Navratna/Miniratna 1997 → Maharatna 2009-10.
• Maharatna tests: Navratna first + listed with SEBI minimum public shareholding + significant global presence + 3-year averages of turnover > Rs 25,000 cr, net worth > Rs 15,000 cr and PAT > Rs 5,000 cr [1].
• Board cap per project: Maharatna Rs 5,000 cr, Navratna Rs 1,000 cr (each, or 15% of net worth, whichever is lower), Miniratna-I Rs 500 cr, Miniratna-II Rs 300 cr.
• Trap: a "Maharatna with net worth of Rs 40,000 cr can invest Rs 6,000 cr per project" is wrong. The cap is the lower figure, Rs 5,000 cr.
• HAL became a Maharatna in October 2024. NCERT still shows it as a Navratna.
• Trap: Maharatna status does not reduce government ownership below 51%. The firm stays a CPSE.

Mains Points

• Autonomy as the alternative to selling off. After 1991, the state could either free strong CPSEs or sell weak ones. Maharatna status is the "free them" route:
• more freedom → faster investment and joint-venture decisions → the firm can compete with private and global players;

• it fits the New PSE Policy 2021, where profitable firms in strategic sectors are kept and made stronger, while non-strategic CPSEs are privatised or closed [2].

• Autonomy on paper vs in practice (GS-II governance link). A higher investment cap means little if ministries still interfere in appointments, pricing or dividend demands. Real autonomy needs a professional board, independent directors and less ministry control. Listing adds market discipline, but it also exposes the firm to pressure to pay high dividends to the government.

• Fiscal link (GS-III). Maharatnas are large, profit-making firms, so they help the budget through dividends, which have risen every year since 2020-21 [3]. Unlike a one-time disinvestment receipt, dividends come in every year. But taking too much cash out as dividends can leave less for the firm's own capital spending and global growth, which is the reason Maharatna status was created.

Related concepts

• Central public sector enterprise
• Maharatna, Navratna and Miniratna status
• Navratna status
• Miniratna status
• Disinvestment
• Minority stake sale
• Strategic sale
• Strategic sector (public enterprise policy)
• Golden share

Read more

• Public enterprises after 1991: CPSEs, the Ratna system, disinvestment and privatisation