Orissa Minerals Development Company (OMDC), a Kolkata-based mineral exploration company under the steel ministry, has applied for miniratna status to gain more autonomy in its operations.
Sources in the steel ministry said that OMDC had applied for a miniratna status three to four months back and the proposal is currently under study by the Department of Public Enterprises (DPE).
However, a senior DPE official said the department has not heard about the company. “We have 248 companies in our list and OMDC doesn’t figure in it at all,” said the official, who did not wish to be named.
OMDC officials could not be contacted for a comment.
Miniratna, which is usually conferred by the DPE, is a sought-after status by public sector companies as it gives them greater decision making and capital expenditure power.
The most important criteria to be eligible for a miniratna status for a category I Public Sector Enterprises (called Category-I PSE) is that it should have made profits in the last three years, the pre-tax profit should have been Rs. 30 crore or more in at least one of the three years and it should have a positive net worth, according to the DPE website.
For Category-II PSEs, the company should have made profit for the last three years continuously and should have a positive net worth. However, an analyst with a domestic fundhouse said the company meets all the criteria to be eligible for a miniratna Category-I company.
“According to its annual report, OMDC has been profitable for the last three years and had a pre-tax profit of over Rs. 112 crore for the fiscal 2010. It also has a positive net worth of around Rs. 700 crore,” he said.
For the fiscal 2010,the company had a positive net worth of Rs. 793.16 crore. But for sustained performance the company has to operationalise its mines at the earliest, he said.
Satish Chandra, chairman and managing director of OMDC had told DNA in November that the company is pressing hard to operationalise its mines at the earliest. In fact, it has applied for a miniratna status and is in the process of recruiting several experts on its Board to be eligible for it, he had said.
According to the DPE, these miniratna PSEs should also have not defaulted in the repayment of loans/interest payment on loans due to the government, should not depend on budgetary support and the Boards of these PSEs should be restructured by inducting at least three non-official directors. A fund manager, whose clients have invested in the company, said OMDC is very likely to get a miniratna status for a category-I PSE and this will bring in more operational efficiency.
According to the DPE guidelines, a miniratna Category-I PSE has the power to incur capital expenditure on new projects, modernisation, purchase of equipment, etc without government approval up to Rs. 300 crore, or equal to their net worth, whichever is lower.
Besides, they are also free to establish joint ventures and subsidiaries in India, with the stipulation that the equity investment of the PSEs should be limited to Rs. 100 crore in any one project, should not exceed 5% of the net worth of the PSE in any one project, or 15% of the net worth of the PSE in all JVs/subsidiaries put together.
OMDC has 206 million tonnes of iron ore reserves and 44 million tonnes of manganese ore reserves.
Though it has access to six iron ore and manganese ore mines in Orissa, almost all of them are operating below potential or are at a halt due to expiry of mining leases.
Sources in the steel ministry said that OMDC had applied for a miniratna status three to four months back and the proposal is currently under study by the Department of Public Enterprises (DPE).
However, a senior DPE official said the department has not heard about the company. “We have 248 companies in our list and OMDC doesn’t figure in it at all,” said the official, who did not wish to be named.
OMDC officials could not be contacted for a comment.
Miniratna, which is usually conferred by the DPE, is a sought-after status by public sector companies as it gives them greater decision making and capital expenditure power.
The most important criteria to be eligible for a miniratna status for a category I Public Sector Enterprises (called Category-I PSE) is that it should have made profits in the last three years, the pre-tax profit should have been Rs. 30 crore or more in at least one of the three years and it should have a positive net worth, according to the DPE website.
For Category-II PSEs, the company should have made profit for the last three years continuously and should have a positive net worth. However, an analyst with a domestic fundhouse said the company meets all the criteria to be eligible for a miniratna Category-I company.
“According to its annual report, OMDC has been profitable for the last three years and had a pre-tax profit of over Rs. 112 crore for the fiscal 2010. It also has a positive net worth of around Rs. 700 crore,” he said.
For the fiscal 2010,the company had a positive net worth of Rs. 793.16 crore. But for sustained performance the company has to operationalise its mines at the earliest, he said.
Satish Chandra, chairman and managing director of OMDC had told DNA in November that the company is pressing hard to operationalise its mines at the earliest. In fact, it has applied for a miniratna status and is in the process of recruiting several experts on its Board to be eligible for it, he had said.
According to the DPE, these miniratna PSEs should also have not defaulted in the repayment of loans/interest payment on loans due to the government, should not depend on budgetary support and the Boards of these PSEs should be restructured by inducting at least three non-official directors. A fund manager, whose clients have invested in the company, said OMDC is very likely to get a miniratna status for a category-I PSE and this will bring in more operational efficiency.
According to the DPE guidelines, a miniratna Category-I PSE has the power to incur capital expenditure on new projects, modernisation, purchase of equipment, etc without government approval up to Rs. 300 crore, or equal to their net worth, whichever is lower.
Besides, they are also free to establish joint ventures and subsidiaries in India, with the stipulation that the equity investment of the PSEs should be limited to Rs. 100 crore in any one project, should not exceed 5% of the net worth of the PSE in any one project, or 15% of the net worth of the PSE in all JVs/subsidiaries put together.
OMDC has 206 million tonnes of iron ore reserves and 44 million tonnes of manganese ore reserves.
Though it has access to six iron ore and manganese ore mines in Orissa, almost all of them are operating below potential or are at a halt due to expiry of mining leases.
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