Govt asks PSUs to put succession plans in place

Concerned over increasing number of PSUs becoming headless on account of poor succession plans, the government today said there is a need for better planning instead of finding a head at the eleventh hour.

"In most of the CPSEs, succession planning is poor. We invariably find a situation where on the last day when the CMD is retiring, we hand over the charge of the CPSE to the senior most executive in the company and it almost takes a year before the next person is actually given the charge," Heavy Industries and Public Enterprises Minister Praful Patel said.

Speaking at SCOPE excellence awards for top-performing PSUs, he said, this is also not something which is desirable, specially in lieu of the fact that state-owned units account for 33% of India's total market capitalisation.

Nearly a dozen central public sector entities do not have a full time Chairman and Managing Director (CMD) and in some cases, the post has been vacant for over a year.

These include country's top iron ore and miner NMDC, world's largest coal producer CIL, leading bullion giant MMTC, Nalco and SVJNL.

On recent trend of not inducting people from the private sector on CPSEs board as independent directors, Patel said, it needs correction.

"Earlier on boards of CPSEs, private sector people were allowed to be acting as independent directors. Of late, there has been a recent development that has prohibited people from private sector... I think this is something which needs to be corrected in a time when we have so much of competition."

He said private sector initiatives should be welcomed in the management of CPSEs.

There are 250 CPSEs in the country, including the largest turnover company Indian Oil Corporation, the most profitable company Oil and Natural Gas Corporation, the largest public utility company NTPC and the company with the highest market capitalisation Coal India.

Some of these companies figure in the 500 biggest companies of the world.