REC accorded with 'Maharatna' company status

‘Maharatna’ company status to REC: Power sector-focused non-banking finance company (NBFC) REC Ltd. has recently been accorded the status of a ‘Maharatna’ Central Public Sector Enterprise (CPSE) by the Department of Public Enterprises, under the Ministry of Finance (MoF) thus providing it with greater operational and financial autonomy.

  • The REC Ltd., is the 12th company to be given the Maharatna Status.

Significance of Maharatna Status:

  • The conferral of "Maharatna’ CPSE will provide the company's board greater authority when taking financial decisions.
  • It will enable the REC to be involved in technology joint ventures and other strategic alliances.
  • It can make equity investments to be involved in financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad.
  • This authority is capped at 15% of the net worth of CPSE concerned, with a limit of Rs.5,000 crore in one project.
  • The board can also structure and implement schemes for personnel and Human Resource Management and Training.

What is ‘Maharatna’ status?

“Maharatna” status which was introduced in 2010, is given to the Central Public Sector Enterprises (CPSE) by the Central Government to make these enterprises global giants.

This status is granted to a company which has recorded more than Rs. 5,000 crore of net profit for three consecutive years, an average annual turnover of Rs. 25,000 crore for three years or should have an average annual net worth of Rs. 15,000 crore for three years.

Criteria for grant of Maharatna status to CPSEs-

  1. Having Navratna status.
  2. Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations.
  3. An average annual turnover of more than Rs. 25,000 crore during the last 3 years.
  4. An average annual net worth of more than Rs. 15,000 crore during the last 3 years.
  5. An average annual net profit after tax of more than Rs. 5,000 crore during the last 3 years.
  6. Should have significant global presence/international operations.

As of the now, Maharatna CPSEs to businesses:

  1. Bharat Heavy Electricals Limited.
  2. Bharat Petroleum Corporation Limited.
  3. Coal India Limited.
  4. GAIL (India) Limited.
  5. Hindustan Petroleum Corporation Limited.
  6. Indian Oil Corporation Limited.
  7. NTPC Limited.
  8. Power Finance Corporation.
  9. Oil & Natural Gas Corporation Limited.
  10. Power Grid Corporation of India Limited.
  11. Steel Authority of India Limited.
  12. REC Ltd.

About REC:

  • REC Limited, formerly Rural Electrification Corporation Limited was incorporated in 1969 is a public Infrastructure Finance Company in India’s power sector.
  • It is a Public Sector Undertaking and finances and promotes power projects across India.
  • It is functioning under the purview of the Ministry of Power.
  • The company is listed on both National Stock Exchange and Bombay Stock Exchange.
  • It provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.
  • REC has played a key role in the success of the flagship schemes of the Government of India (GoI) such as Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and SAUBHAGYA.
  • It has contributed towards achieving village and household electrification in the country.
  • REC is currently serving as the nodal agency for Revamped Distribution Sector Scheme (RDSS), for revamping the distribution sector to alleviate the financial & operational issues.