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DPE against performance-related pay to CIL loss-making arms

CIL has already incurred an additional Rs 6,500 crore burden on account of recent pay revision

Press Trust of India  |  New Delhi 

Department of Public Enterprise has opposed a Coal Ministry proposal to provide performance related pay (PRP) from consolidated funds to executives of CIL arms that made losses in the relevant period.

It has said this is not in conformity with norms and would soon send a note to Cabinet in this regard.

In the absence of sufficient Profit Before Tax (PBT), loss making CPSEs are not allowed to distribute PRP, the DPE officials said adding there is no concept of providing PRP based on the consolidated account of holding company.

Coal Ministry in a proposal to government has sought permission for allowing Limited (CIL) to determine the corpus of PRP due since 2007-08 on Profit Before tax (PBT) based on its consolidated accounts and not from the individual accounts of its seven subsidiaries as required by the Department of Public Enterprises (DPE).

"Under existing norms, no such exemption are being granted. The department will soon send a revised note to the Committee of Secretaries (CoS) which is examining the matter and once the CoS approves it, DPE will send it to the Cabinet," sources said.

In the event of accepting the proposal, CIL would have to shell out about Rs 200 crore on account of PRP to its loss-making subsidiaries Eastern Coalfields Ltd (ECL) and Bharat Coking Coal Ltd (BCCL).

CIL has already incurred an additional Rs 6,500 crore burden on account of recent

Coal Ministry in its proposal has said that CIL is the holding company which appointed executives and controlled the cadre, transferring functionaries from one arm to another on promotion.

"It is unfair if the benefits of 2007 are not provided to some subsidiaries of CIL and unequal PRP among executives would create human resource problems," a Coal Ministry official said.

If this is allowed, then other CPSEs which cannot afford will seek similar dispensation on different grounds, DPE officials said.

At present as per the 2007 pay revision, PRP is directly linked to PBT and rating of a PSU besides performance of individual executives.

CIL which accounts for over 80% of the domestic coal production has eight subsidiaries - ECL, West Bengal, BCCL, Jharkhand, Central Coalfields (CCL), Jharkhand, South Eastern Coalfields (SECL), Chattisgarh, Western Coalfields (WCL), Maharashtra, Northern Coalfields(NCL), Madhya Pradesh, Mahanadi Coalfields (MCL), Orissa and Central Mine Planning and Design Institute (CMPDI), Ranchi.

Of these, the two -- ECL and BCCL were loss-making in 2007-08.

First Published: Sun, December 30 2012. 11:18 IST