Friday, October 11, 2013

NHPC seeks Navratna status, submits proposal to power ministry

An NHPC power project 
A GOVERNMENT of India enterprise NHPC has applied for Navratna status that would provide the PSU more freedom in investment decisions. The move follows the country's largest hydel power producer’s plans to foray into thermal, solar and wind energy segments. The proposal was submitted...
to the power ministry, which in turn has forwarded it to the department of public enterprises (DPE) — the nodal agency for PSUs. DPE comes under the ministry of heavy industries and public enterprises.
Currently, a Miniratna category-I enterprise, NHPC was established in 1975 and today the company has an authorized share capital of Rs 15,000 crore. The company earned a net profit of Rs 2,348.22 crore last financial year. A Navratna status provides for greater autonomy and more powers to the company's board, especially on investment decisions.
Among others, the board of a Navratna company can decide on investments worth up to Rs 1,000 crore in a single project without going for government nod. At present, there are 14 Navratna companies.
NHPC is among the top 10 companies in the country in terms of investment with an installed power generation capacity of 5,702 MW, including 1,520 MW implemented through joint ventures (JV). Seven projects with a total capacity of 4,095 MW are under construction. NHPC will also be developing a 1,320 MW thermal power project along with Chattisgarh government in that state. It is also planning for developing grid connected 50 MW wind and 100 MW solar power projects.
As compared to other Central Public Sector Enterprises (CPEs), the Boards of Navaratna CPSEs have been delegated enhanced powers in the areas of (i) capital expenditure, (ii) equity investment in joint ventures/subsidiaries in India or abroad, (iii) human resources development (iv) orgnaisational restructuring and (v) raising of debt from the domestic capital markets and borrowings from international markets.
However, the grant of Navratna status to CPSEs is not directly linked to their turnover.
In order to acquire a Navratna status, a PSU needs to score of 60 (out of 100), based on six parameters, which include Net Profit to Net Worth, Manpower cost to cost of production or services, gross margin as capital employed, gross profit as turnover earnings per share, inter-sectoral comparison based on net profit to net worth.
Moreover, a company must first be a Miniratna and have four independent directors on its board before it can be made a Navratna.
Such a company must also have at least three ‘Excellent’ or ‘Very Good’ Memorandum of Understanding (MoU) ratings during the last five years.
Such a company must spend up to Rs 1,000 crore or 15 percent of their net worth on a single project or 30 percent of their net worth in the whole year (not exceeding Rs 1,000 crores).

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