The Central Government has upgraded IRCTC (Indian Railway Catering and Tourism Corporation) and IRFC (Indian Railway Finance Corporation) to Navratna status, making them part of an elite group of Central Public Sector Enterprises (CPSEs) under the Railway Ministry. With this move, all seven listed CPSEs of the Indian Railways now hold Navratna status, out of a total of 12 CPSEs.
Key Highlights
Enhanced Autonomy:
- Navratna status allows IRCTC and IRFC to make discretionary investments up to ₹1,000 crore or 15% of their net worth, which facilitates faster decision-making and supports major capital expenditure (CAPEX) and investment plans.
- This increased autonomy enables the companies to establish joint ventures, open overseas offices, and access new markets, driving growth and innovation.
Market Expansion and Efficiency:
- The status will help boost their market reach and competitive positioning.
- It fosters technological alliances and supports mergers and acquisitions, paving the way for long-term gains.
Government Classification:
- The Indian government classifies CPSEs into three categories: Maharatna, Navratna, and Miniratna.
- Currently, India has 14 Maharatna and 26 Navratna CPSEs.
About IRCTC
Function: A CPSE under the Ministry of Railways, IRCTC is a leader in railway catering, tourism, and online ticketing.
Financial Performance (FY 2023-24):
- Annual Turnover: ₹4,270.18 crore
- Profit After Tax (PAT): ₹1,111.26 crore
- Net Worth: ₹3,229.97 crore
Significance: IRCTC is now the 25th Navratna CPSE, enhancing its operational and investment capabilities.
About IRFC
Function: IRFC is responsible for mobilizing funds for the massive infrastructure expansion and modernization projects of Indian Railways.
Financial Performance (FY 2023-24):
- Annual Turnover: ₹26,644 crore
- Profit After Tax (PAT): ₹6,412 crore
- Net Worth: ₹49,178 crore
Established: Founded in 1986, IRFC plays a pivotal role in financing railway projects.
Significance: IRFC will be recognized as India’s 26th Navratna CPSE, bolstering its capacity to support the nation’s railway infrastructure.
What Does Navratna Status Mean?
Definition & Criteria:
Navratna status is a prestigious classification for CPSEs, placing them between the Maharatnas (the largest and most autonomous) and Miniratnas.
Eligibility is determined based on financial performance, profitability, net worth, and operational efficiency through six key indicators:
- Ratio of net profit to net worth
- Ratio of manpower cost to total production/service cost
- Ratio of profit before depreciation, interest, and tax (PBDIT) to capital employed
- Ratio of profit before interest and taxes (PBIT) to turnover
- Earnings per share
- Inter-sectoral performance
A composite score of 60 or more and an Excellent or Very Good MoU rating in three out of the last five years are required.
Benefits:
Faster decision-making and enhanced autonomy in areas such as capital expenditure, investment in joint ventures, mergers and acquisitions, and human resource management.
Opens up new domestic and international market opportunities and promotes innovation.
Government’s Objective:
The Navratna scheme, introduced in 1997, is aimed at making CPSEs more competitive and efficient on a global scale.