Maharatnas and board vacancies

3 maharatnas shackled by board vacancies


The government on Wednesday named SAIL, ONGC, IOC and NTPC maharatnas, but all except NTPC will have to wait for the government to appoint 50 per cent independent directors before exercising the powers that come with the coveted status. Maharatna status gives the giant public sector companies the right to make equity investments up to 15 per cent of their net worth, subject to a ceiling of Rs 5,000 crore, in Indian and overseas projects without any regulatory approval from the government.

SAIL, ONGC and IOC will not be able to exercise the powers till they complete the quorum of their respective boards, department of public enterprises secretary Bhaskar Chatterjee told Financial Chronicle. ONGC chairman and managing director RS Sharma told FC that the company had four independent directors and needed five more as per the guidelines set by the Securities and Exchange Board of India (Sebi), the capital market regulator.

“This (appointment of independent directors) is not in our hands. The process is on and we hope it will be completed soon,” he said.
Department of public enterprises data show that IOC requires four independent directors and SAIL nine. IOC chairman and director business development B M Bansal could not be reached for his comments. SAIL spokesperson R K Singhal said the vacancies would be filled up in due course. As per clause 49 of Sebi’s listing agreement, the board of a company with an executive chairman must have 50 per cent non-executive directors. Non-official directors of public sector units are appointed by the respective ministries.

Chatterjee said his department had sent letters to the ministries of steel, and petroleum and natural gas to take steps to induct the required number of non-official directors on the boards of SAIL, IOC and ONGC. The maharatna status is a boon to the four companies, which have been aggressively exploring coal and oil assets abroad. NTPC and SAIL are seeking properties in coal-rich countries like South Africa, Indonesia, and Mozambique. Government has asked oil companies like ONGC to acquire one big producing asset or company every year.

The boards of maharatna companies will also be empowered to get into technology tie-ups, joint ventures, and make organisational restructuring without any interference from the government. At present, these navratna (nine jewels) companies were permitted to take independent decisions for investment up to Rs 1,000 crore. The main objective of the maharatna scheme is to empower mega central public sector enterprises to expand operations and become globally competitive.
……by……Sarita C. Singh / Financial Chronicle