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| New corporate governance manual for state PSUs |
| Bishnu Dash / Kolkata/ Bhubaneswar Feb 19, 2009, 00:59 IST |
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Close on the heels of the Satyam Computer Services (SCS) fraud, the Orissa government plans to introduce a new manual for corporate governance of the state- owned public sector undertakings (PSUs).
The Hyderabad based Administrative Staff College of India (ASCI), entrusted with task of framing the new manual for the purpose has submitted its final draft and the notification is likely to be issued soon, sources said.
The manual intends to provide guidelines for strengthening the structure and system of the PSUs in the state and to enhance the mutual trust between these enterprises and the stakeholders. It seeks to put an effective governance system in place and bring out clarity in reporting in the state owned enterprises.
The new manual focuses on enhancing awareness among the employees about the good governance norms. Besides, it intends to promote transparency and build up capability of the employees to make business oriented decisions.
The integrity of the business processes are sought to be achieved through various internal controls. The proposed guidelines will apply to the statutory corporations, state owned enterprises where 51 percent or more of the share capital is held by the Orissa government and the companies are registered under Companies Act 1956.
According to the draft manual, the secretary of an administrative department will develop the mandate for a state owned enterprise, in consultation with the chief secretary, secretary in the public enterprises (PE) department and representatives from the finance and the planning and co-ordination department.
The secretary in PE department will be entrusted to check the relevance of the mandate developed for all the state owned enterprises.
Further, the Board of Directors of the concerned state owned enterprises will be responsible for achieving the mandate developed by secretary in the concerned department. Apart from granting autonomy and flexibility to senior management for day to day operations, the board must provide the strategic direction to the state owned enterprises for achieving the mandate.
While the board shall carry out its mandate through proper care and diligence in decision making, it will have to ensure that the public enterprises strive to achieve reasonable return on its assets. The secretary of the concerned administrative department will review the mandate every 5 years or more frequently as will be required.
The Board of the public enterprises will evolve a vision and mission statement and it can take the advice of the external consultant in drafting these statements. The state owned enterprises including Orissa Industrial Infrastructure Development Corporation (Idco) will have to prepare a three year corporate plan for achieving the mandate.
The corporate plan will have asset management plan, human resources plan, information management and technology plan. However, the Board will delegate the day to day management of the public sector enterprises to the senior management after the corporate plan is approved.
As a measure to improve the performance of the PSUs, the manual prescribes the introduction of the system of memorandum of understanding (MoU) to be signed between an administrative department and the PSU board. The secretary of the concerned administrative department will have to ensure the development and execution of the MoU.
The MoU among others will have mission and vision of the enterprise, delegation of powers for achieving the MoU targets, an indicative list of performance criteria, assistance expected by the PSU from the state government and the action plan for execution of the MoU.
The MoU will be the basis for empowering the Board of Directors with autonomy and authority to mobilize resources required for achieving the objectives.
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