Economy

‘Lack of succession planning stunts growth of PSUs'

Our Bureau Kolkata | Updated on February 25, 2011

‘A large number of CPSUs, including the Navaratnas, are working without either a full-time CMD or adequate full-time directors. Organisations such as Indian Oil have been running without full-time CMDs for years.'

The Standing Conference on Public Enterprises (SCOPE) has said that lack of succession planning is limiting the growth prospects of the central public sector undertakings. The apex organisation of the CPSUs has also demanded private sector to part with two per cent of its net profit – as is currently applicable to the public sector – towards corporate social responsibility (CSR).

“A large number of CPSUs, including the Navaratnas, are working without either a full-time Chairman and Managing Director (CMD) or adequate full-time directors. Organisations such as Indian Oil have been running without full-time CMDs for years. In the case of ONGC, the Acting CMD is handling responsibilities of at least three to four full-time directors. We are in the process of coming out with a status report on this issue,” the SCOPE Chairman, Mr U.D. Choubey, told newspersons here on Thursday.

Kolkata chapter

He was in the city in connection with the opening of Kolkata chapter of the organisation on Thursday. This is the first SCOPE chapter to be opened outside Delhi.

“We have proposed the department of public enterprises to complete the vigilance enquiry of the aspiring candidates for top jobs in the CPSUs before they are shortlisted for interview and finalise the successor three months ahead. In today's age it is not a difficult proposition,” he said, adding that once the vigilance enquiry is over, the Centre should not entertain further allegations against the selected candidate, which often causes delay in succession.

The SCOPE Chairman was also critical of huge board level vacancy for independent directors as well as the role and contribution of such directors. “There should be a feedback mechanism to judge the contribution of an independent director in the growth of the company,” he said. A proposal in this regard was also forwarded to the DPE.

According to Mr Choubey, as against the total capital investment of Rs 5,28,00,000 crore in the 246 CPSUs, the Centre has collected Rs 7,25,00,000 crore in terms of taxes and dividends from these organisations in the last five years alone. PSUs contribute one-third of the total revenue collected by the government.

“There cannot be a more profitable business,” he said.

Published on February 25, 2011

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