PSUs need to adopt effective succession planning practice:Secy

The boards of public sector companies need to be empowered while they should also adopt effective succession planning practices, Cabinet Secretary Ajit Seth said today.
"The performance of a CPSE to a large extent depends on the functioning of its Board. A Board needs to be efficient as well as effective. Having Directors including Independent Directors, with the requisite skills, knowledge and experience is the starting point.
"This implies that effective succession planning practices are adopted by state-owned enterprises so that talent is nurtured and mentored to take up Board positions. It is equally important that discussions in the Board are informed and transparent," Seth said at the international workshop on Performance Evaluation of state-owned enterprises.

The Cabinet Secretary said it is the government's endeavour to further empower Boards of both the public and private sector through incorporating appropriate provisions in the recently enacted Companies Act, 2013.
"In the context of the public sector, having a proper risk management and mitigation policy is of utmost importance considering that worldwide state-owned enterprises including CPSEs from India are amongst the largest investors," he said.
Seth said an important aspect of transparency is having strong internal and external control mechanisms as well as disclosure requirements.
CPSEs are presently subject to external oversight by institutions such as the Comptroller and Auditor General of India, Central Vigilance Commission, regulatory agencies including the Stock Exchange Board of India. They are also under the purview of the Right to Information Act.

"To ensure that the intended outcome of empowerment of Boards through enhanced delegation of financial and operational powers is realised, we need to be on a continuous learning curve to ensure accountability to the shareholders and other stakeholders," he said.