The government calls Oil and Natural Gas Corporation (ONGC) a ‘Maharatna’ (literally meaning most valuable jewel) Public Sector Undertaking (PSU). A PSU gets “Maharatna” status when it records a net profit of more than Rs 5,000 crore for three consecutive years, i.e. an average annual turnover of Rs 25,000 crore for three years, or an average annual net worth of Rs 15,000 crore. Should be Rs. for three years.
It could not be more suitable in case of ONGC as it meets all the three criteria. In fact, ONGC, arguably one of the crown jewels in the government’s PSU collection, is so large, and so valuable, that it owns another Maharatna PSU, HPCL, and two ‘miniratna’ PSUs.
ONGC was ranked 11th in Platt’s ranking of global energy companies and 4th among Indian companies on the Fortune 500 global list of largest corporations. It is not only a huge money maker for the government, but also strategically important, accounting for 71 per cent of India’s domestic energy production, while its subsidiary ONGC Videsh, which acquires energy assets abroad, accounts for 71 per cent of India’s energy assets. Energy security is the key to plans.
Given the seriousness of ONGC, it is surprising that the government, with 58.9 per cent direct stake as the principal owner of ONGC and 10.7 per cent through state-owned financial institutions, has been unable to find a full-time head to manage . It has been more than 17 months since the posts fell vacant for ONGC.
ONGC has been without a full-time chief executive officer since April 2021 (the roles of chairman and managing director in ONGC, like most PSUs, are combined into one). Subhash Kumar was the Finance Director and the senior most Director on the Board of the Company. Named the acting chief after Shashi Shankar retired on March 31, 2021. Kumar retired on December 31, 2021 and was ‘successed’ by ONGC’s head of human resources Alka Mittal, who was given additional charge.
Mittal’s appointment, though temporary, created a buzz in corporate circles as she would have become the first woman to head ONGC if she had been confirmed in the job. As things stand, she is set to retire later this month and media reports indicate that, another provisional chief will be chosen until the government makes up its mind on a panel of names recommended by a search committee. Would have made
The committee was formed in February, 10 months after the top job fell vacant. This in itself exemplifies the apathetic attitude of the government as a promoter towards PSUs, because in any well-run company, a succession plan was initiated before the successor’s departure and not months later. Worse, it took another six months for the government to finalize the terms of reference for the search committee.
Such glacial pace of decision-making reflects the apathetic attitude of the government towards PSUs, even though many, including ONGC, are publicly held and hence have to comply with the listing requirements of not only exchanges, but other shareholders. interests also have to be taken into account.
However, both the elected and administrative branches of government regard public undertakings as mere extensions of their private fiefdoms and not as independent corporations. The fact that such a large and important company was allowed to run with acting heads for so long tells us that as far as the government was concerned, it did not consider the presence of full-time – and therefore the entire The essential requirement for being a well accountable CEO. One might also wonder why bother with the CEO when ministers and ministry mandarins are firing shots anyway.
It mocks the government’s repeated claims of making PSU management more empowered and autonomous. It also highlights the lack of corporate governance in PSUs. A 2018 study by proxy advisory firm Stakeholders Empowerment Services (SES) found that only 14 of the 48 PSUs surveyed were fully compliant. At least 22 were non-compliant in the board structure, significantly among independent directors. According to primeinfobase.com, more than two-thirds of most of the 54 listed PSUs—in terms of the number of independent directors on their boards—were non-compliant.
Despite the wide gap between those guidelines and those prescribed under the Companies Act and SEBI rules for listed companies, the government has also not revised the Corporate Governance Guidelines for Central PSUs, which were issued back in 2010. The time has come for the government to talk about Corporate Governance in Public Sector Undertakings. What is the sauce for the goose, what should be the sauce for the baller.
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