Babu Beat. Govt’s divestment dept to define ‘buyer’

Accused of being indifferent to the concerns of ‘manpower’ and using its disinvestment schemes simply as a means to meet revenue targets, the government is likely to clearly define the role of the ‘buyer’.

Key sources reveal that the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, will define the role of the ‘acquirer’ in all its future disinvestment proposals.

With the Narendra Modi-led government stepping on the gas to meet its divestment targets and reports of listed state undertakings being called upon to buy other PSUs’ stakes, there is need to have a clear plan for manpower integration.

Last year, ONGC’s acquisition of 51.11 per cent stake of Hindustan Petroleum Corporation helped the government meet its divestment targets but it has also led to an unseemly stand-off between the managements of both the institutions.

Sticky issues

The current situation is such that HPCL is not accepting ONGC as the promoter. The trigger for this was the fact that the top positions in both the entities are held by individuals of the same rank. If the role of the acquirer had been defined, such a situation would not have arisen and HPCL would have had to accept ONGC as its promoter.

There is fear of more such cases happening. Consider this: The disinvestment target for FY2018-19 is ₹80,000 crore; the amount raised so far ₹9,220 crore or just 11 per cent of the target. The government hopes that LIC’s acquisition of 51 per cent stake of IDBI will take it closer to its target. Similarly, Coal India stake sale is reportedly in the offing. “We realise that we have to define the role of the acquirer to ensure that a Hindustan Petroleum Corporation-ONGC like situation doesn’t get repeated,” says a senior DIPAM official.

While there is a debate on whether the ONGC-HPCL deal is technically a disinvestment or, for that matter, LIC looking at IDBI Bank or JNPT at assets of Air India, the reality is that such transactions are happening. The harsher fact is that the government does not have an integrated HR Policy in place to tackle such M&As.

“Shifting stuff from one pocket to another as has been the case of HPCL, where the government offloaded its shares to ONGC, which is promoted by it, is not the true spirit of disinvestment. But, having done so, manpower issues need to be clearly defined, as disinvestment is an ongoing process,” says Pavan Kumar Vijay, Founder of corporate legal advisory firm Corporate Professionals, and a Fellow Member of the Institute of Company Secretaries of India.

Right now the Ministry of Petroleum & Natural Gas, the nodal Ministry, has stepped in to help resolve the situation. The practical way out could be that the government could create an internal arrangement so that the ONGC Chairman can participate in the decision-making process of HPCL, says V.C. Agrawal, former Director of human resources for Indian Oil Corporation.

Manpower woes

Uncertainty clouds the fate of the staff at the PSU banks being merged. Take, for example, the government’s announcement of September 17 regarding amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank, creating a ₹15-lakh crore entity. Post-merger, it will be the third-largest bank in India after State Bank of India and ICICI Bank and will have to deal with over 85,000 employees, across around 9,500 branches.

“Finance Minister Arun Jaitley said that nobody will have to worry. But, reality is different. We are talking about 9,000-odd branches. There will be administrative offices that will be closed. There will be transfers. Some will be left with no option but to take voluntary retirement,” points out Ashwani Rana, Vice-President of the National Organisation of Bank Workers.

According to Rana, integration of human resources is a big challenge. “Is there a policy in place to deal with manpower management? The government says the intent is to deal with non-profit asset issues, but is there a record to show that merger or consolidation has helped them achieve this target?” he poses. KKN Kutty, National President, Confederation of Central Government Employees & Workers, says, “If the consolidation, as is the case with SBI and erstwhile associate banks, was to make the bank more profitable, then it hasn’t served the purpose. SBI has reported loss.”

As former ONGC Chairman RS Sharma says, “Manpower integration is very critical, it is part of good corporate governance practice which has to be honoured by everyone. Any board decision has to be taken with the consent of the owner.” Sums up Pavan Vijay, “An HR policy that defines roles — who will play what role after the deal, what system will be followed, who controls the business — is much needed, as mergers and acquisitions do not happen at the snap of a finger.”

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