The Hindu Business Line : PSUs are not Govt departments: Raha

AT the 12th annual general meeting of Oil and Natural Gas Corporation (ONGC) here today, the Chairman, Mr Subir Raha, referred to the `identity crisis' suffered by public sector companies. "... The distinction between a company and a department gets diffused in the public sector domain," Mr Raha said.

This is not the first time that ONGC, with gross income touching Rs 47,245 crore in 2004-05, up nearly 43 per cent, has complained about being penalised for making profit, because the subsidy burden was eating into its profits, and also raised issues pertaining to corporate governance, including the appointment of independent directors.

Mr Raha in his statement said, "Companies are not departments. Everyone expects companies to make profit, and everyone considers departments to be cost-centres. The companies by definition are governed by the Companies Act and departments are administered under executive rules and procedures. Companies have shareholders; departments do not. Listed companies are legally liable for compliance with the Listing Agreement; there is nothing like a listed department. A listed company even in public sector remains a listed company, not a department."

Stating that administrative instructions could not override the law, Mr Raha pointed out that under the concept of limited liability, each investor was obliged to share proportionate risk, and equally share proportionate reward.

"The purpose of a company is to create wealth. All business involves risk, except when protected by the State. If the State refuses to or withdraws protection, the choice is either to dissolve the company and carry out the purpose through a department, or let the company run as an enterprise," Mr Raha said.

When contacted by Business Line, the Petroleum Minister, Mr Mani Shankar Aiyar, said that, "I have nothing to say on this issue. It is best left to the shareholders."

The At the AGM the shareholders approved the re-appointments of Mr N.K. Mitra (Director Exploration), Mr N.K. Nayyar (Director Navratna), Mr P.K. Sinha (Government nominee), Mr Sunjoy Joshi (Government nominee) and Mr A.K. Hazarika (Director onshore) on the company's board.

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