Scope Awards

Facing challenges

There is a need to develop a cadre of potential candidates and professional executives within a PSE for appointment at top management levels

by Anil Tyagi
Facing-challenges

“The world is going through turbulent times. Amidst this economic volatility, India remains a ray of hope. Public Sector Enterprises (PSEs) of our country have played a vital role in promoting growth as well as ensuring that much growth is inclusive.”
Pranab Mukherjee, President of India

“PSEs are a symbol of management excellence and transparency.”
Pradeep Kumar Sinha, Cabinet Secretary

“PSEs have established themselves as world class dynamic organisations with constant focus on transparency, integrity, professionalism and accountability.”
Seema Bahuguna, Secretary, Department of Public Enterprises

“PSEs are torchbearers of Indian Economy.”
RK Bahuguna, Chairman & Managing Director, RAIL TEL

“PSEs over the years have demonstrated excellent performance and growth. During the year 2015-16, their overall net-profit has increased by 12.5%, from Rs 1,02,866 crore in 2014-15 to Rs 1,15,767 crore. Their contribution to Central Exchequer has increased from Rs 2,00,593 crore in 2014-15 to Rs 2,78,075 crore in 2015-16, showing growth of 38.63 %.”
Dr UD Choubey, Director-General, SCOPE (Standing Conference of Public Enterprises)



These statements show the confidence of the Government of India that family silver cannot be sold out in the open market in haste. It has taken 26 years for the Government of India to draw a firm policy of disinvestment. The government has to still fine tune a roadmap of withdrawing from running business enterprises. The 8th Public Sector Day celebrations by Public Sector Enterprises (PSEs) indicate they will grow robustly and will remain the main donor to the GDP (Gross Domestic Product).

The President of India, Pranab Mukherjee, said that India we started with only five PSEs with an investment of Rs 29 crore. He said India is a fast-growing economy and many more glorious chapters will be added to the credit of PSEs in future too.

Pranab-Mukherjee-President-The way the world economy is not picking up, private investments are not encouraging, foreign direct investments are not pouring in as expected, not much new industries are being set-up on the ground is a worrisome scenario. The paradox is that private sector enterprises have not shown the financial discipline, growth and robust dynamism for generating wealth and employment. So, should the government transfer the ownership of PSEs from public to private entrepreneurs in the given scenario? One can sell the stakes but transferring ownership is an herculean task as it involves the survival of 12.34 lakh employees employed with PSEs. It’s a major issue that is likely to change the dynamics of the economy of the country.



The first and foremost challenge is to clearly define the role and responsibility of ownership and management, and second challenge is the institution of independent directors. OECD guidelines on corporate governance state that the government should develop an ownership policy. It should define the State’s role in governance of SOEs, how the State will implement its ownership policy and the respective roles and responsibility of government officers involved in the implementation. Therefore, the ownership policy should contain proper segregation of role and responsibility of the owner regarding control and management. Such a policy will ensure that PSEs are run in a professional manner and there will be no uncertainties in taking decisions. As owner, the main concern of the government should be that the PSEs operate and function in a transparent and ethical manner, achieve set goals, comply with statutory regulations and earn profits besides fulfilling laid down commitments, including CSR.

The institution of independent directors has emerged as SE Boards have a complex collation. Absence of requisite number of independent directors on the board has implicated PSEs for not complying with the mandatory requirements of corporate governance. Here, it is important to understand the existing process for appointment of independent directors in which PSEs have negligible role while the government has a major role. The process is tedious and needs to be reformed and simplified.

On the CSR front, the challenge before the PSEs relates to the appointment of Independent Directors for setting up a Board sub-committee on CSR, which approves allocation of CSR funds for various projects, monitors their use and implementation through a transparent mechanism. Selection of a suitable agency/trust is also important besides creating awareness among employees, shareholders and other stakeholders about the company’s CSR efforts.

Succession planning is another challenge which involves capacity and skill building, motivation, retaining talented employees, etc. Capacity building is crucial to fill the knowledge gap at various levels in the organisation and it should be an ongoing process. Capacity building is critical for sustainable and competitive growth.



PSE Boards have a complex collation of diverse and heterogeneous partners, namely functional directors, government nominee directors and independent directors. All the three come with different qualifications and possess varied experiences and working atmosphere/background. An effective orientation programme is required so that they can contribute effectively to the sustainable development of the organisation.

Succession planning, grooming dynamic leaders for top management and handling strategic positions is a challenging job. There is a need to develop a cadre of potential candidates and professional executives within a PSE and the public for appointment at top management levels. gfiles end logo

Rural Electrification Corporation Limited

DR PV RAMESH Chairman & Managing Director, Rural Electrification Corporation Limited



Rural Electrification Corporation Limited (REC), a listed Navratna PSE under the Union Ministry of Power, was incorporated on July 25, 1969. REC is a NBFC with ‘Infrastructure Finance Company’ status. Its main objective is to finance and promote power sector projects in the country. REC endeavours to provide end-to-end support required for power sector transformation—competitive financing for the entire range of generation, transmission and distribution infrastructure development and modernisation, green energy projects, power sector knowledge centre that provides technical assistance, consultancy services, apart from partnering GoI as the nodal agency for overseeing the implementation of flagship programmes like DDUGJY, UDAY, and PFA.

National Aluminium Company

tk-chand-National-Aluminium-Company-Limited2



sia. Nalco is rated as the lowest cost producer of alumina in the world as per Wood Mckenzie report. It has diversified to renewable energy sector in a significant manner by commissioning 198 mw wind power plant in four different places to reduce carbon footprint. Moving ahead, Nalco has also utilised the entire available roof-top space of its corporate office and township at Bhubaneswar for setting up a 260 kWp solar power plant.

Hindustan Petroleum Corporation Limited

MK SURANA Chairman & Managing Director



HPCL, a Navratna PSU, was formed on July 15, 1974. It is a Fortune Global 500 Company with a ranking of 367 and Platts Top 250 Global energy Company with a ranking of 48. It enjoys over 21 per cent marketing share in India as of March 2016 (PSU category) and has a strong presence in refining and marketing of petroleum products in the country. HPCL owns and operates refineries at Murillo, Visakhapatnam, and also owns largest lube refinery in the country at Mumbai. It has a vast marketing network consisting of 13 zonal offices and 119 regional offices facilitated by a supply & distribution infrastructure comprising 43 terminals, 37 aviation service stations, 47 LPG bottling plants, 7 lube blending plants, 42 inland relay depots and 22 exclusive lube depots.

Hindustan Aeronautics Ltd

T SUVARNA RAJU Chairman & Managing Director Hindustan Aeronautics Ltd



Hindustan Aeronautics Limited, a Navratna category Central PSU, is a premier aerospace company with 20 production/overhaul divisions and 11 co-located R&D centres across the country. HAL’s spectrum of expertise encompasses design and development, manufacture, upgrade and repair/ overhaul of aircraft (fighters, trainers and transport), helicopters and associated aero-engines, accessories and avionics for both military and civil applications. HAL has diversified into portfolios like manufacture of structures for aerospace launch vehicles/satellites and cryogenic engines. It is also involved in the production and overhaul of marine and industrial gas turbine engines. It has emerged as a globally competitive aerospace company with supplies of major structural assembly packages and large volumes of machined components to leading aerospace companies like Airbus and Boeing.

Power Finance Corporation Limited

rajeev-sharma-Managing-Director,-Power-Finance-Corporation-Limited



Power Finance Corporation Ltd (PFC) was established in 1986 as a financial institution to cater to the finance needs of the Indian power sector. PFC was conferred with the status of a ‘Navratna’ in 2007. In 1998, the company was registered with RBI as NBFC and in 2010, RBI classified PFC as an ‘Infrastructure Finance Company’ (NBFC-ND-IFC). It offers fund and non-fund based products and services such as project term loans, debt refinancing, short term loans, corporate loan, bridge loan, line of credit, guarantee, lease financing and letter of comfort, among others. It also provides loan syndication services in the areas of power, energy & infrastructure. The company has crossed cumulative loan sanctions of Rs 6 trillion as on December 31, 2016.

GAIL (India) Limited

BC TRIPATHI Chairman & Managing Director, GAIL (India) Limited



GAIL (India) Limited was incorporated in 1984 as a Central PSU under the Ministry of Petroleum and Natural Gas, with the Mission of “accelerating and optimising the effective and economic use of natural gas and its fractions for the benefit of national economy”. GAIL has played a crucial role in the development of Indian gas sector. It’s the flagship natural gas company of India, having a presence across the entire gas value chain. This integrated gas major has over 11,000 km of natural gas trunk pipelines across 16 States, two LPG pipelines 2,038 km long, six gas processing plants across India with combined Liquid Hydrocarbon production capacity of 1.3 MMTPA and 810 KTPA gas-based petrochemical plant in UP. It is co-promoter of the 280 KTPA BCPL complexes in Assam and 1.1 MMTPA OPaL project in Gujarat.

Indian Renewable Energy Development Agency Ltd

KS POPLI Chairman & Managing Director Indian Renewable Energy Development Agency Ltd



IREDA has been maintaining its leadership position in renewable energy (RE) space and developing several innovative financial schemes/solutions for meeting the market requirement. It has an excellent trackrecord of financing more than 2,200 clean energy projects in the country with cumulative loan sanctions of more than Rs. 38,000 crore and disbursements over Rs. 20,900 crore. It has been a profit-making company since its inception. The installed RE capacity in India has reached more than 39,500 mw, contributing about 14 per cent in country’s installed capacity of 288 GW. IREDA’s efforts have enabled commercialisation of RE sector in India, resulting in active participation from domestic commercial banks, international funding agencies and FDI.

Engineers India Limited

sanjay-gupta-Chairman-Managing-Director



Engineers India Ltd (EIL), a Navratna PSU, is one of the leading design and engineering organisations in South Asia. Established in 1965, EIL provides engineering consultancy and EPC services principally focused on the oil & gas and petrochemical industries. It has also diversified into sectors like infrastructure, water and waste management, solar & nuclear power and fertilisers to leverage its strong technical competencies and trackrecord. EIL is a ‘Total Solutions’ engineering consultancy company providing design, engineering, procurement, construction and integrated project management services from ‘Concept to Commissioning’. EIL has an impressive record of executing over 5000 projects including 400 major projects valued over US$200 Billion.

NBCC (India) Limited

anup-kumar-mittal-cmd-nbcc



NBCC (India) Ltd is a Navratna enterprise under the Ministry of Urban Development. It stand out as a leader in the construction sector with more than Rs. 36,000 crore order book in hand till March 2016. The company has registered a substantial 32 per cent growth in top line during FY 2015-16 as compared to the previous year. It has posted a profit of Rs. 311 crore while its total income surged to Rs. 5,838 crore during FY 2015-16. The company’s present areas of operations are categorised into three main segments—Project Management Consultancy, Real Estate Development and EPC Contracting, The New Motibagh- Green Complex (Delhi) under General Pool Residential Accommodation (GPRA) Scheme is one of the finest examples of such a re-development work in recent times. The company has earned a niche for itself in construction of green buildings.

ONGC Videsh Limited

NK VERMA Managing Director ONGC Videsh Limited



ONGC was set up under the visionary leadership of Jawahar Lal Nehru. Pandit Nehru reposed faith in Keshav Dev Malviya, who laid the foundation of ONGC in the form of Oil and Gas division, under the Geological Survey of India, in 1955. A few months later, it was converted into an Oil and Natural Gas Directorate. Today, Oil and Natural Gas Corporation Ltd is leader in Exploration & Production (E&P) activities in India with a 70 per cent contribution to India’s total hydrocarbon production. ONGC has established more than 9 billion tonnes of inplace hydrocarbon reserves in the country. Six out of seven producing basins in India have been discovered by ONGC. ONGC produces more than 1.20 million Barrels of Oil Equivalent (BOE) per day.

Mineral Exploration Corporation Limited

dr-gopal-dhawan-mdmecl



Mineral Exploration Corporation Limited (MECL), a ‘Mini Ratna’ (Category II) company, was created under the Union Ministry of Mines in 1972. Its main objective is to explore minerals “to bridge the gap between initial discovery of mineral prospect and its eventual exploitation”. It is the only organisation in the country—both in government and private sector—possessing the entire spectrum of mineral exploration facilities under one roof. With its corporate office at Nagpur, Maharashtra, it carries out mineral exploration activities through number of projects and establishments in various parts of the country. Since inception, it has completed over 1,357 mineral exploration projects and has established 159 billion tonnes of mineral resources.

Electronics Corporation of India

debashis-das-cmd-ecil



Electronics Corporation of India Limited (ECIL) was established in 1967 as a PSE under the Department of Atomic Energy (DAE). It is recognised as the torchbearer of electronics and IT revolution in the country. ECIL has established the indigenous capability of technologies in the country and has significantly contributed in national programmes like NPR, SECC and Electronic Voting Machines (EVM) for elections. ECIL is the agency to implement the next generation main automatic exchange (MAX-NG) having state-of-the-art technologies towards digital India across the country as societal contribution.

WAPCOS Limited

rk-gupta-cmd-wapcos-limited



WAPCOS Limited is a Mini Ratna company under the aegis of the Ministry of Water Resources, Ganga Rejuvenation and River Development. Incorporated on June 26, 1969, WAPCOS has been providing consultancy services in all areas of water resources, power and infrastructure sectors in India and abroad. In recent years, WAPCOS achieved high profitability, secured business in new areas/regions and received appreciation from clients in India and abroad. Highlights of its key achievements are: its gross income increased to Rs. 928.30 crore; profitability increased to Rs. 111.05 crore; new business worth Rs. 1375.92 crore procured; turnover per employee reflecting productivity of the company grew to Rs. 130.65 lakh; net-worth of the company increased to Rs. 309.31 crore; and, paid dividend of Rs. 16.50 crore for the year 2014-2015, highest in the history of the company.

Goa Shipyard Limited

shekhar-mittal-cmd-goa-shipyard-ltd



GOA Shipyard Limited (GSL), a public sector shipyard, has an unmatchable track record of timely execution and fixed cost delivery of over 215 ships and 125 Fast Interceptor Boats. GSL today stands as the success story of the changing face of Indian defence shipyards. The company has achieved nearly 40 per cent growth in the last two years with the bottom line turning positive from a loss of Rs. 61 crore in 2013-14 to a net profit of Rs. 77 crore in 2014-15. The yard designs and builds amongst the best patrol vessels in the world in terms of quality, aesthetics, and cost and delivery time. It is the only shipyard in the country engaged in the entire design spiral of ships, leading from concept design to basic design to detailed design.

Power Grid Corporation of India Ltd

seema-gupta-ed-powergrid



Powergrid is one of the largest power transmission companies in the world. Its primary business is bulk transmission of power through its transmission network. It has maintained world class standards in project execution and asset management and is pursuing its global vision to consolidate its presence as a significant player in emerging markets of South Asia, Middle-East Asia, CIS & African countries. It has been making valuable contribution in GOI’s nation building schemes like Accelerated Power Development and Reforms Programme and Rajiv Gandhi Grameen Vidyutikaran Yojana. Powergrid, as Central Transmission Utility, is the nodal agency for processing and grant of connectivity, long term open access/ long term access and medium term open access.

WAPCOS Limited

pooja-kapoor-bd-wapcos-ltd



WAPCOS Limited, a Mini Ratna company under the the Ministry of Water Resources, Ganga Rejuvenation and River Development, was incorporated on June 26, 1969. It provides consultancy services in all areas of water resources, power and infrastructure sectors in India and abroad. WAPCOS has achieved high profitability, secured business in new areas/regions and received appreciation from clients in India and abroad. Highlights of its key achievements are: its gross income increased to Rs. 928.30 crore; profitability increased to Rs. 111.05 crore; new business worth Rs. 1375.92 crore procured; turnover per employee reflecting productivity of the company grew to Rs. 130.65 lakh; net worth increased to Rs. 309.31 crore; and, it paid dividend of Rs. 16.50 crore for the year 2014-2015.

Rajasthan Electronics & Instruments Limited

ak-jain-md-rajasthan-elctronics



Rajasthan Electronics & Instruments Ltd (REIL), Jaipur, is a Mini-Ratna PSE under the Union Ministry of Heavy Industries & Public Enterprise. The Company has a consistent trackrecord of professional management and profitable operations since its inception in 1981. As per audited results of FY 2015-16, the net worth of the company has crossed three digits with huge order booking. This growth vision is carried through product enhancements, cost reductions, larger markets through wider geographical reach, diversifications, absorption of new technologies and corporate governance.

Indian Oil Corporation Ltd

b-ashok-chairman-iocl



Indian Oil Corporation is India’s largest commercial enterprise, with a sales turnover of Rs. 3,99,601 crore and profit of Rs. 10,399 crore for FY 2015-16. It is ranked 161st among the world’s largest corporates (and first among Indian enterprises) in the Fortune ‘Global 500’ listing for 2016. As India’s flagship national oil company, with a 33,000-strong workforce, it has been meeting India’s energy demands for over half a century. Indian Oil’s business interests straddle the entire hydrocarbon value chain —from refining, pipeline transportation and marketing of petroleum products to exploration and production of crude oil & gas, marketing of natural gas and petrochemicals, besides forays into alternative energy and globalisation of downstream operations.

NTPC Limited

gurdeep-singh-cmd-ntpc



NTPC is a Maharatna, the largest power utility in the country. It has been contributing to the nation’s economic social development by contributing nearly 24 per cent of the country’s generation. NTPC is the third largest power company in terms of coal-based power generation capacity, second in PLF, third in machine availability and seventh in terms of electricity generation, among the top 20 coal-based power generating companies globally. NTPC has total installed capacity of 48,873 MW from 19 coal-based, 7 gas-based, 10 solar PV, one Hydro and 9 Subsidiaries/JV power stations. It has a capacity of over 22,000 MW under implementation at 23 locations across the country. NTPC’s first coal mine, Pakri-Barwadih at Hazaribagh, became operational in December 2016. First wind power project of NTPC, Rojmal Wind Energy Project, 50 MW is being set up in the State of Gujarat.

Steel Authority of India Ltd

pk-singh-cmd-sail


Steel Authority of India Ltd, a Maharatna CPSE and India’s largest steel maker, recently completed a massive modernisation and expansion programme simultaneously at all five integrated steel plants and special steel plant at Salem. Objectives were capacity enhancement, eliminating technological obsolescence, installing state-of-the-art technology, product enrichment, developing mines and collieries to meet future requirements. The Prime Minister dedicated SAIL’s modernised and expanded units in IISCO Steel Plant (ISP) and Rourkela Steel Plant (RSP) to the nation. SAIL has taken a big stride towards accomplishing the long-term vision of being a world class corporation and to maintain its leadership in the Indian steel business. gfiles end logo

VOL. 11 | ISSUE 2 | MAY 2017

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