The Hindu Business Line : Profit-making PSUs to get more financial autonomy

THE Cabinet Committee on Economic Affairs (CCEA) on Monday decided to increase the financial autonomy of profit-making Central Public Sector Enterprises (CPSEs). The committee has also allowed more discretionary power to the Chairman-cum-Managing Director of the CPSEs to approve foreign trips.

For the first time, navaratnas and miniratnas have been allowed to invest up to 30 per cent of the net worth for mergers and acquisitions. For one project, this limit has been set at 15 per cent of their net worth.

In the case of joint ventures, navaratnas and miniratnas have been allowed to establish such ventures with investment up to 15 per cent of the company's net worth in one project.

The limit for navaratna companies for setting up subsidiaries and joint ventures have been raised to Rs 1,000 crore from Rs 200 crore in one project. For Miniratna I category of companies, the capital expenditure limit has been increased to Rs 500 crore or equal to net worth from the existing Rs 200 crore and for Miniratna II the limit has been raised to Rs 250 crore or 50 per cent of net worth, whichever is lower. Earlier, this limit was Rs 100 crore.

In the case of joint ventures and subsidiaries, CPSEs would be allowed to invest up to 30 per cent of their net worth.

The Cabinet also decided to empower the boards of the CPSEs to go in for mergers and acquisitions within the financial limits set for floating joint ventures and subsidiaries.

The Cabinet also approved the constitution of an inter-ministerial committee to assist the Apex Committee for expeditious inclusion and deletion of CPSEs in the navaratna category. It has also been decided to relax the existing condition that navaratna and miniratna companies should not depend on Government guarantees. Such guarantees can be sought wherever it is required by external donor agencies.

The Chairman and Managing Directors of CPSEs have been empowered to approve business tours abroad of functional directors up to five days in emergency cases under intimation to the administrative ministry.

Briefing reporters after the meeting, the Ministry for Heavy Industries, Mr Santosh Mohan Dev, said that the move is in line with the National Common Minimum Programme that promises to devolve full managerial and commercial autonomy to successful profit-making companies operating in a competitive environment.

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