Modi government grants 'Navratna' status to IRCTC, IRFC—What it means
What's the story
The Department of Public Enterprises has elevated the Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC) to the coveted 'Navratna' category of the Central Public Sector Enterprise (CPSE) classification.
The upgrade acknowledges their contributions as CPSEs under the Ministry of Railways.
With this, IRCTC and IRFC become India's 25th and 26th Navratna companies, boosting their credibility in the public sector.
Financial health
Performance metrics of IRCTC and IRFC
IRCTC has reported an annual turnover of ₹4,270.17 crore for FY24, with a profit after tax (PAT) of ₹1,111.26 crore. The company also boasts of a net worth of ₹3,229.97 crore for the fiscal year.
Likewise, IRFC has shown strong financial performance with an annual turnover of ₹26,644 crore and PAT of ₹6,412 crore in FY24. Its net worth is an impressive ₹49,178 crore, according to the Department of Public Enterprises data.
Classification criteria
Understanding the 'Navratna' status in CPSEs
The 'Navratna' status is one of India's categories for Central Public Sector Enterprises (CPSEs) along with 'Miniratna' and 'Maharatna.'
The classification aims to give state-run companies operational autonomy and decision-making powers.
Companies with 'Navratna' designation have fulfilled certain conditions including holding Miniratna-I status, earning profits for three consecutive years, having a pre-tax profit of ₹30 crore or more in at least one of those three years, and positive net worth.
Performance indicators
Criteria for 'Navratna' upgrade in CPSEs
To be eligible for a 'Navratna' upgrade, companies should have an "Excellent" or "Very Good" MoU rating for three out of the last five years.
They should also have a composite score of 60 or more on the basis of six chosen performance indicators: net profit to net worth ratio; manpower cost to total cost of production ratio; PBDIT to capital employed ratio; PBIT to turnover ratio; earnings per share (EPS), and inter-sectoral performance.