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Investors may soon be able to measure the degree of professionalism in the board of directors of each public sector undertaking in order to make better investment decisions.
The Standing Conference of Public Enterprises (SCOPE), an apex organisation of PSEs, has initiated a move to grade the degree of professionalism of the boards of PSUs, as part of its initiative to further professionalise the functioning of PSU boards.
The organisation is in the process of developing a matrix to give ratings to the boards of all the 249 PSUs in India.
“After finalising the mechanism for giving such ratings, we will approach the Government to give its stamp of approval to the rating mechanism. This will add weight and recognition to the PSU ratings,” Dr U.D. Choubey, SCOPE's Director General, told media persons here on Tuesday.
Market cap
Currently, PSEs, including public sector banks, account for about 28 per cent of the total market capitalisation of the listed companies on the Indian bourses. The total contribution of listed central PSEs (including banks) in the BSE market capitalisation stood at over Rs 18,85,048 crore at the end of May 2011.
In response to a question, Dr Choubey said, SCOPE may not be able to take up grading of all the PSUs on its own, as it will be a “gigantic task.” “We may have to outsource some portions of the work. We will be appointing a consultant,” he said.
To Take inputs
OECD countries currently have such a grading system for their government-owned companies. “We may not import the system in its entirety, but we will take some inputs from it,” he said.
As a part of this, the organisation is conducting the first of its kind two-day programme on ‘Professionalism of PSE Boards with Special Focus on Independent Directors, in Hyderabad on Tuesday and Wednesday.
Scope has called for early filling up of vacancies against the posts of chairmen and independent directors in PSUs. Currently, about 69 chairmen and 300 independent directors posts are lying vacant in the PSU orbit.
“We have also written to the Government and SEBI to bring out new norms so as to reduce the number of independent directors in PSU boards from the present 50 per cent to one-third of the board strength. We are also against the concept of having a chairman and CEO in the same company, as this would create dual power centres,” Dr Choubey said.
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