Reddy: Glad tidings

New Delhi, July 25: Navratnas, miniratnas and other profit-making state-run companies will now be able to invest more in acquisitions and joint ventures. While raising the investment ceiling for such public sector units, the cabinet today gave them the freedom to take such decisions without refering the matter to the government.

The navratnas and miniratnas can now invest up to 30 per cent of their networth in merger and acquisition (M&A) deals. The limit for a single deal is, however, set at 15 per cent.

The move is expected to remove bottlenecks in PSU decision-making.

On the other hand, this could also enable the Congress-led government to feign ignorance in the face of any political opposition to a PSU move.

Navratnas are now allowed to invest a maximum of Rs 1000 crore in a single joint venture project, while class I miniratnas can invest up to Rs 500 crore and class II companies up to Rs 250 crore on their own without prior clearance from the government. Conditions relating to government guarantees would be relaxed wherever they are required by external donor agencies, an official spokesperson said.

The M&A powers of navratna and miniratna central public sector enterprises will be linked to the new terms and conditions of government guarantee. The company boards have also been empowered to undertake mergers and acquisitions within the financial limits set for floating joint ventures and subsidiaries.

Other profit-making PSUs have been allowed to invest up to a maximum of Rs 150 crore or up to 50 per cent of their networth, whichever is lower, in fresh joint ventures.

?This decision is aimed to benefit central public sector enterprises as part of the government's commitment to enhance the delegated powers to them and also navratna and miniratna companies,? information and broadcasting minister Jaipal Reddy said.

The government has also decided that sub-committees of PSU boards may be given powers in human resource management like appointments, transfers and postings for executives lower than board-level ones.

The chairmen and managing directors of the profit-making PSUs will be empowered to approve business tours abroad (other than study tours and seminars) of functional directors up to five days in an emergency after informing the administrative ministry.

Reddy said an inter-ministerial group will also be constituted to assist an apex committee for expeditious inclusion or deletion of central public sector enterprises in the navratna category. The navratnas include Bharat Heavy Electricals Ltd (Bhel), the National Thermal Power Corporation (NTPC), the Oil India and the Oil and Natural Gas Corporation (ONGC).

The government had set an ad-hoc committee of experts headed by Arjun Sengupta to draw a comprehensive roadmap to free PSUs from the apron strings of the government. Officials said today's reform measure drew its basis from deliberations of this committee.

He said the Congress-led government was committed to the national common minimum programme and would strengthen the profit-making PSUs.