Senior executives in Central Public Sector Enterprises (CPSEs) will have to wait till elections are over in five States for implementation of the new measures related to their tenure. The election process will end on December 9.
On August 29, Heavy Industries and Public Enterprises Minister Praful Patel had said that the proposal would be considered by the Government soon. But Business Line has learnt that since some of the reform measures could be considered populist, the Cabinet is now likely to consider the proposal only after the Assembly elections in the five States are over.
The reform proposals include a minimum fixed tenure for the chairman-cum-managing director and extension of service up to two years for extraordinary officials at the level of Deputy General Manager and above. A detailed proposal in this regard has already been cleared by the Group of Ministers headed by Finance Minister P. Chidambaram and is awaiting Cabinet clearance.
Although it is not clear if the decision will be effective from prospective or retrospective effect, many CPSE chiefs are keenly awaiting a decision, as it may pave the way for extension of service. For example, ONGC chief, Sudhir Vasudeva, is slated to retire in February, while the BHEL Chairman, B.P. Rao, will retire at the end of this year.
One of the key provisions of the proposal suggests a minimum fixed tenure of three years for the CMD of a CPSE. At present, there is no fixed tenure.
However, the retirement age is fixed at 60 years, and one important eligibility criteria for executives to become CMD is that they should have a minimum of two years of service remaining on the date of vacancy. Once the proposal is accepted, a CMD can continue even after age 60.
The proposal is based on the recommendations of Government-appointed panel headed by former SAIL Chairman S.K. Roongta. The existing criteria for executives of having a minimum of two years of service remaining on the date of vacancy for functional directors/CMDs will be dispensed with.
“In the absence of adequate succession planning in many CPSEs as of now, several competent executives are not being considered for these positions,” the committee had said.
Another provision relates to extension of service for senior officials, which will help CPSEs get over the talent crunch.
Such a provision is required, as due to the gaps in compensation levels vis-a-vis the private sector as well as the demographic profile, some CPSEs lack experienced personnel in critical areas.
As on March 31, 2012, there were 260 CPSEs (excluding seven insurance companies) with a total investment of over Rs 7 lakh crore.
These companies employ nearly 14 lakh people (excluding contractual and casual labour). However, at present only 225 CPSEs are operating, out of which 161 are in profit, 63 in loss and one is a no profit-no loss company.