Mumbai, March 28: The Oil and Natural Gas Corporation (ONGC) and Gas Authority of India (Gail) are still in the wilderness on their navratna status. Nearly two years have passed since the notification to this effect was issued by the ministry of industry and yet, to this day, the two most strategically important public sector units continue to languish without any added powers.All this is happening when ONGC has its hands full in a crisis like a fire which has caused substantial losses. "At a time when some professional advice would have been welcome from the new board of directors of a navratna, the ONGC finds itself totally at a loss," sources said.
The same goes for Gail which has had to plan some substantial investments like a LPG pipeline from Kandla to Loni as also added investments in a petrochemicals complex in Uttar Pradesh. More importantly, both Gail and ONGC would do well to heed some counsel for planning their future course of action on crossholding of equity, observers aver.
It may berecalled that ONGC has picked five per cent of the Centre's holding in Gail while the latter, in turn, has subscribed to 2.5 per cent in ONGC. Future decisions on a similar arrangement may now have to be taken with greater care as the deal drew a lot of flak from investors who complained that they would lose out in the bargain as shareholders.
The wait has been particularly exasperating considering that all the other PSUs, which qualified for the navratnas status, have got their new board of directors in place and had their first round of meetings also. In the case of ONGC and Gail, sources say though the list of part-time directors has been finalised for both companies, inexplicable delays have occurred. The grapevine has it that names have been dropped or swapped and in some cases, the candidates have even refused the offer.
The list of other navratnas include Bharat Heavy Electricals, National Thermal Power Corporation, Steel Authority of India, Indian Petrochemicals Corporation, Videsh Sanchar Nigam,Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation. The general feedback is that there has been a feeling of buoyancy with the new board in place as there have been innovative proposals and a sense of better focus in daily operations.
The navratna status would allow these PSUs to invest up to Rs 200 crore in any one project, five per cent of their networth in any single project and 15 per cent in all joint ventures/subsidiaries put together. While normally the investment would be done directly by the parent PSU, in cases where it proposes to invest through a subsidiary into another joint venture and also provides additional capital for the purpose, the stipulation mentioned would apply.
The boards of the navratnas would also be allowed to:
incur capital expenditure on purchase of new items or for replacement without any monetary ceiling; enter into technology joint ventures or strategic alliances; effect organisational restructuring includingestablishment of profit centres, opening offices here and abroad etc; create and wind up all posts including those of non-board level directors (functional directors who may have the same pay scales as those of their board-level counterparts but are not board members); raise debt from the domestic capital markets and borrow from the international market after getting approval from the RBI or department of economic affairs.None of the PSUs will depend on budgetary support or government guarantees. The resources for implementing programmes should come from their internal resources or other sources.
Likewise, proposals pertaining to capital expenditure or which involve higher investment should be prepared with the help of consultants and appraised by financial institutions.
The ministry of industry had made it clear that induction of the part-time directors would precede any move to exercise autonomy/authority by these nine PSUs. Each of these corporations were to induct initially at leastfour of these directors who had an "impeccable stature and background."
The number was to be more for those companies which had a very large number of functional directors. The ministry said that within six months of their induction, the number of non-official part-time directors must be increased to reach at least one-third of the total strength of the board. Selection of full-time and part-time government nominee directors would continue as per the existing procedures, the notification added.
The ministry of industry reiterated that performance of the navratnas would be done with "utmost seriousness" following their board restructuring. It was of the opinion that such monitoring should be done primarily by the boards of these PSUs. The administrative ministry should also continue to monitor the performance of the companies preferably on a quarterly basis.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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