The recent update from the news is that the Rural Electrification Corporation (REC) has now been bestowed with ‘Maharatna’ status as a Central Public Sector Enterprise (CPSE). This status holds significant implications for the corporation’s functionality, authority, and potential impact.
About REC and its Working Domain
Established in 1969, the Rural Electrification Corporation operates as a Non-Banking Financial Company (NBFC), with its primary focus being Power Sector Financing and Development. The Ministry of Power supervises all operations of REC across India.
Over the years, this corporation has successfully taken up the mantle as a Nodal Agency for flagship schemes of the Government of India. These schemes include Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGAYA), Deen Dayal Upadhaya Gram Jyoti Yojana (DDUGJY), and National Electricity Fund (NEF). Additionally, REC supports the Ministry of Power in effectively managing and monitoring the Ujjwal Discom Assurance Yojana (UDAY).
Implications of Maharatna Status for REC
When a corporation is granted the ‘Maharatna’ status, its board attains the power to make equity investments. It can undertake financial joint ventures and wholly-owned subsidiaries as well as mergers and acquisitions. These business activities are viable both within the Indian territory and abroad but must be maintained under a ceiling of 15% of the Net Worth of the concerned CPSE. The limit on the investment for a single project stands at ₹5,000 crores.
Furthermore, the status allows the board to conceive and execute schemes focusing on personnel, human resource management, and training. REC, with its newfound status, can also delve into technology joint ventures or initiate other strategic alliances.
The Maharatna Status: A Comprehensive Overview
Introduced in 2010 by the Union government, the Maharatna status was devised for mega Central Public Sector Enterprises (CPSEs) to evolve into global giants. The CPSEs eligible for this status are those where the direct holding of the Central Government or other CPSEs is at least 51%.
Financially, a corporation must have recorded a net profit exceeding ₹5,000 crores for three consecutive years to be considered for Maharatna status. Alternatively, it needs an average annual turnover of ₹25,000 crore for three years or an average annual net worth of ₹15,000 crore for the same period.
An important eligibility criterion alongside the financial benchmarks is that the corporation should have operations on a global scale. Moreover, the CPSE should already hold a Navratna status and be listed on an Indian stock exchange before being upgraded to a Maharatna entity.
The Rural Electrification Corporation’s journey to the Maharatna status has been noteworthy, and this status can now pave the way for future developments and strategic alliances.
