Govt to soon decide on performance pay for CIL lossmaking arm

As per 2007 pay revision, PRP is directly linked to PBT and rating of PSU, besides performance of individual execs

The Cabinet may soon take a call on implementing performance-related pay in CIL's loss-making arms Eastern Coalfields and Bharat Coking Coal using the PSU's consolidated funds, an issue on which Department of Public Enterprises and Coal Ministry's have differing views.

The Department of Public Enterprises (DPE) has moved a note to the Cabinet for its consideration, opposing a Coal Ministry proposal to implement performance-related (PRP) pay from consolidated funds of Coal India Ltd (CIL) in the subsidiaries, DPE officials told PTI.

"This (Coal Ministry proposal) is not in conformity with DPE norms. We have sent a note in this regard, which is likely to be taken up by the Cabinet soon," an official said.

As per the 2007 pay revision, PRP is directly linked to Profit Before Tax (PBT) and rating of a Public Sector Unit (PSU), besides performance of individual executives.

In the absence of sufficient PBT, loss-making CPSEs are not allowed to distribute PRP, the officials said, adding there is no concept of providing this pay based on consolidated accounts of the holding company.

Eastern Coalfields Ltd (ECL) and Bharat Coking Coal Ltd (BCCL) were loss-making in 2007-08.

The Coal Ministry in its proposal to the DPE has sought permission for allowing CIL to determine the corpus of PRP due since 2007-08 on PBT. This will be based on its consolidated accounts, and not from the individual accounts of its seven subsidiaries as required by the DPE.

"Under the existing norms, no such exemptions are being granted," an official 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 - ECL and BCCL.

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

The 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 pay revision 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 pay revision will seek similar dispensation on different grounds, DPE officials said.

CIL which accounts for over 80 per cent of the domestic coal production has eight subsidiaries - ECL, BCCL, Central Coalfields, South Eastern Coalfields), Western Coalfields, Northern Coalfields, Mahanadi Coalfields, and Central Mine Planning and Design Institute.