Friday, February 13, 2009

Breach of LS Privileges by Deora- Alleges Left Front

Breach of LS privilege by Deora-I: Communist Party MP says petroleum minister knowingly misled House on gas pricing

Jan 26: Lok Sabha Member of Parliament Suravaram Sudhakar Reddy of the Communist Party of India (CPI) has moved a motion involving a breach of privilege against Petroleum Minister Murli Deora, alleging that he knowingly misled the House on two separate instances in respect of the government`s stance on the legal battle between RIL and RNRL over the sale and supply of gas from the D-6 field in the Krishna-Godavari Basin. Reddy had pointed out the following deviations in the affidavit filed by the government in the case vis-a-vis statements made by Deora during the course of his replies to questions raised in the House:8The contractor`s freedom to market gas is subject to restrictions envisaged under the Production Sharing Contract (PSC) provisions with respect to utilisation as well as pricing. It is always understood by the parties to this litigation that under the PSC, the contractor`s right to market the gas is subject to the approval of the price formula or basis by the government of India, as well as the gas utilisation policy of the government. --In reply to an unstarred question in the Lok Sabha on August 30, 2007, Deora had said that as per the PSC signed by the government under the NELP regime, the operators have the freedom to market the gas in the domestic market on an arm`s length basis. The government does not fix the price of gas. The role of the government is to approve the valuation of gas for the purpose of determining the government take. 8The Empowered Group of Ministers (EGoM) decision with respect to approval of the gas price formula or basis has not made any distinction between the contractor`s share and the government`s share of natural gas and is applicable to all the sales of natural gas to all the consumers. All the gas and not just the share of the contractor or the government shall be sold at a price which follows from the price formula or basis approved by the government, which in this case comes to $4.2/mmbtu. No distinction has been made in the government decision regarding its own share or the contractor`s share. --In replies to separate Lok Sabha questions on August 16 and August 23, 2007, Deora had stated that the PSCs provide for pricing of gas on the basis of sale on an arm`s length basis. The role of the government is to approve the valuation gas for the purpose of determining the government take. In order to provide transparency in approving valuations, the government formed a committee in August, 2006, to formulate guidelines for approving the natural gas price formula. Following extensive consultations with various stakeholders, including E&P operators, gas users and industry bodies, the committee submitted its report to the government, which has been accepted. (Click on Details for more information) Details

Can PSUs really lead India Inc's charge in beating slowdown?

Can PSUs really lead India Inc's charge in beating slowdown?
8 Feb 2009, 1450 hrs IST, Aman Dhall & Lisa Mary Thomson,
ET BureauPrint EMail Discuss Share Save Comment Multiple pages view Text:

In the good times, they faced the brunt of perception. They were the rusty government cogs which always paled in comparison to the shining wheels

Recession: A business opportunity
Ghosts of 1929
Top banking crises since 1980s

Formula for successful biz of the private sector.
But with the global financial markets in choppy waters, public sector undertakings (PSUs) are being called upon to lead the way. And surprisingly, they are more than equipped to take the forefront.

Where lies the secret? The cash-rich status of many of these companies has been touted as their prize point. Add to this the relatively debt-free nature of their balance sheets and their presence in sectors which are the bare necessities and you have a winning formula.

But it’s simply not a question of what they have to offer but also the reasons that have brought them where they are. The navratnas particularly, have used the relative autonomy given to them to reinvent themselves in a big way. The numbers prove it all.

In a study conducted by Dun & Bradstreet Information Services India titled ‘India’s Top PSUs 2009’ which compared top 31 NSE listed state owned enterprises with the top 216 NSE listed private sector companies (with a short listing criteria of Rs 1000 cr or more in total income), it was revealed that total sales of 31 government owned companies was almost the same as the total sales of the 216 private sector companies. What this suggested was that in terms of revenues, the 31 PSUs are more or less equal to the 216 private sector companies put together.

You cannot deny that the PSUs, particularly the well-managed ones, are poised to lead India’s battle with the economic slowdown. But if you’re still not convinced, here are the explanations.

Trustworthy Performers.

The PSUs are the fitting contenders to lead the fightback of the slowing Indian economy. Not because they have a guardian angel in the government to support them, but they have time and again, proved their abilities.

Over the past five years, aside from the under-recoveries of the oil marketing companies (OMCs), PSUs engaged in engineering, power, banking, shipping and logistics companies have competed on a near equal footing with top private players in their respective sectors.

According to industry leaders, one of the key factors driving this exemplary performance has been their capability to significantly reduce the high debt levels which plagued their financial statements in the past. This exercise eventually allowed PSUs to clean-up their balance sheets to undertake expansion.

Says Ganesh Raj, tax partner and leader, policy advisory group, Ernst & Young; “Improved operating metrics have resulted in PSUs building strong cash war chests, which enables them today to defend as well as extend their market share, be it through organic or inorganic means.”

Raj has a point, which is mirrored in the PSUs performance. According to a Dun & Bradstreet study, the total aggregate income of the PSUs is almost equivalent to 31% of the country’s GDP at current market prices in financial year 2006-07 as well as in financial year 2007-08.

Moreover, the PSUs have maintained a low debt/equity ratio as compared to their private peers over a long period of time. With a debt/equity ratio of 0.45 in the previous financial year and higher level of cash, the PSUs are less leveraged than their private sector peers(debt/equity ratio of 0.68 in financial year 2007-08) and are better positioned to exploit business opportunities.

Economists feel that a significant advantage that PSUs enjoy is that their income elasticity as well as their price elasticity is low. Moreover, they operate in sectors which are necessities and hence their business cycle has not been affected by the current state of affairs.

Says Subir Gokarn, chief economist-Asia-Pacific at Standard & Poor’s; “They definitely have a more stable profile and less vulnerability. They have also considerably rationalised their cost-structures. With respect to the navratna companies, they have enjoyed a certain degree of autonomy in their operating decisions as well as in their investments. These investments have created capacity that would generate returns over a period of time.”

Blessing in Disguise

If one takes a closer look at the events of the past 14 months, the meltdown in the West could have played a vital part in the PSUs rise to possibly lead the next turnaround for the Indian economy. Economists argue that a positive spin-off has already been of a reduced salary disparity between the public and the private sector.

Earlier, the compensation packages offered by the private sector usedto draw away the best talents from the PSUs. Now with rationalisation in private sector remuneration and given the current job insecurity, retaining talent has become a relatively easier task for them.

Gokarn believes that the huge wave of exits that one used to witness from the public sector to the private sector would now slow down, thereby helping PSUs build further efficiencies in operations. “In terms of attracting fresh talent, it is still early to say whether a young management turk would be tempted to join PSUs in future. But, one must not under-estimate the private sector’s capability to draw talent pool especially from well-managed PSUs which have always remained a great source for excellent human capital,” he feels.

Not only that, PSUs are expected to emerge stronger in the financial, infrastructure, metal and power sectors going forward due to their robust financial strength.

In fact, even as the global banks were hit hard by the current crisis, banks in India showed remarkable resilience to the meltdown across the western world. As many as 19 Indian banks made it to the top 500 global financial brands of 2009, reveals a study by Brand Finance PLC in association with The Bankers magazine. This is in sharp contrast to last year when only six Indian banks made it to this coveted list. Interestingly, 13 out of these 19 banks are public sector banks.

“While the failure of large financial institutions across the globe has certainly contributed, the key reasons behind such a big jump in the number of Indian banks making it to the list are the prudent banking norms which govern the banking sector in India,” says Yashika Singh, head of operations — economic analysis group, Dun & Bradstreet Information Services India.

In fact, the growth curve reflects in the results of key Indian banks which have shown positive growth in terms of total income as well as net profit for the quarter ended December 2008. Another case in point are the OMCs. Through the linkages of financial markets and crude oil market, the meltdown in the financial market led to the withdrawal of speculative money from the crude oil market and hence the decline in crude oil prices. “In this context, it helped ease the burden of high crude prices, which was being borne by OMCs like Indian Oil in the form of huge under recoveries,” believes Sarthak Behuria, CMD of Indian Oil Corporation (IOC).

A section of industry leaders feel that the conservative policies followed by PSUs especially the banks has not only been a blessing in disguise but also has to a large extent insulated them from the global crisis. With government being the key source of funding for the PSUs, they think it gives them that extra edge to overcome the current challenges faced by the private sector vis-a vis obtaining debt for expansion.

Can they lead from the forefront?
PSUs operate in numerous sectors — a number of them core to the economy, such as banking, construction, mining, railways, telecommunication, power, defence. Given the nature of some of these sectors, they are expected to provide impetus to the economy even during the downturn. “PSUs in such sectors will play a critical role in providing growth. For instance, during the 11th five year plan, total investment on infrastructure development by PSUs alone is expected to be Rs 14,365.6 bn,” reckons Singh of Dun & Bradstreet.

The changing role of government — from a moderator to a facilitator — has also helped their cause. In the past few years, the government has played the role of “ignition key” in their turn around by granting more autonomy, and encouraging them to embrace the best market practices. “The government of India’s recent reluctance to immediately roll back fuel prices when the global crude prices fell sharply thereby enabling OMCs to recoup some of the losses which they incurred when fuel prices were not increased, clearly reflects their role in facilitating growth of PSUs rather than moderating the same,” says Raj of E&Y.

On Dalal Street too, PSUs have recently outperformed their private counter-parts. In 2008, the public sector companies paid over 33.5% of their net profits as dividends, whereas those in the private sector paid 20.6% of their profits as dividends. With a number of PSUs involved in businesses that have forward linkages, economists believe that their future performance will depend a lot on the macro-economic indicators.

“For instance, many PSUs are involved in the power business. If the demand for power goes down due to the slowing down of the economy, then it will definitely have an impact on the toplines of the petroleum companies,” says Gokarn of S&P’s.

Hurdles in the way
Arvind Mahajan, executive director — advisory services, KPMG, however, thinks there PSUs still have a lot of hurdles to overcome in the race to become invincibles. PSUs which don’t have navratna status require approval for their projects and investment proposals from government, which he considers is a stumbling block to their growth.

“This delays the process of creation of infrastructure and affects the performance of the organisation and generates complaints from users. In case of the airline and the shipping industry which are competing against private companies, there are immense constraints on how fast they can grow,” he says. According to him, the key remains in how the government can unshackle these companies and give them power and flexibility in their operations.

Business consultants believe that more than the ownership structure, the management practices will decide whether they will rule the next decade. “A classic example in point is of state-run Gujarat State Petroleum Corporation (GSPC) which has done well because of the mindset of the board of the company and their MD whose long association with the company has provided stability,” says Mahajan.

Other successful examples include the Power Financing Corporation (PFC), the National Highway Authority of India (NHAI), and the In-dian Railways. With respect to the railways, modifications in the freight segment have helped them achieve a turnaround and increase the value of output. Now they are looking at setting up a dedicated freight corridor. This freight corridor and the Delhi- Mumbai Industrial Corridor (DMIC), together have the potential of transforming the North-Western part of India over the next ten years.

Some other areas that needs improvement includes linking wages to performance and thereby placing a premium on efficiency of operations. Industry experts feel they should sharp-focus their marketing and sales arms to drive growth in turnover thereby they can leverage upon their expansive breadth of operations. “PSUs really need to work on their business strategy and examine whether they are using their resources to target the right audience. They need to evaluate the products they are selling and customers who are buying these, to check if these two aspects match,” says Gokarn.

K Ravi Kumar, CMD of Bharat Heavy Electricals (Bhel), however, believes that the PSUs are well aware of the need to consistently improve their competitiveness. “We have already identified areas like human resource, engineering and R&D, where we plan to focus more in the coming days. In fact, in the last two years, we’ve increased our spend on R&D considerably. We're implementing enterprise resource planning (ERP) in HR to improve efficiecy,” says Kumar.

In addition to having autonomy in their actions, Gokarn says that PSUs should move towards showing sensitivity to talent costs. His advise is that they need to look beyond the rigid cadre system, move away from the idea of having a life-time engagement with a single company and allow more flexibility at the lower levels. “PSU salaries at lower levels should improve. In the PSUs, the trade-off has mostly been with the assurance of some level of job security,” he says.

Tuesday, February 10, 2009

RIL wants govt to free retail oil prices

What do you think will happen now that Reliance is losing??

New Delhi: It’s a double whammy for Mukesh Ambani-controlled Reliance Industries Ltd. While demand for petroproducts is falling overseas due to global recession, the company’s mainstay refinery in Jamnagar is set to lose its export-oriented unit (EoU) status entailing tax incentives next month as the term expires.
“India has surplus refining capacity ... and some of them converted their plants into EoU and SEZ (special economic zone) status ... today they are having difficulty in selling in export market so they want to sell (fuel) in domestic market,” Planning Commission member (energy) Surya P Sethi told a brainstorming on deregulation of domestic fuel prices organised by Observer Research Foundation on Monday. Sethi did not identify Reliance by name.
Reliance had shut its chain of around 1,500 petrol pumps once domestic retail operations became unprofitable in the face of artificially low prices set by the government for fuels being sold by the state-run marketers during crude’s high run. While the government compensated its firms through bankable IoUs, Reliance did not enjoy that cushion and sought refuge in export status for its 33-million-tonne Jamnagar refinery.
Restarting domestic sales will remain an uncertain proposition unless the government let go of controls on retail prices. Any profit Reliance makes on motor fuels at prevailing retail and crude prices will evaporate the moment there is any upswing in global oil, which will force the government suppress prices artificially to avoid taking the politically unpalatable step of raising prices.
No wonder, Reliance refinery business head P Raghavendran made a strong pitch for deregulation. “We have no escaping (from freeing petrol and diesel pricing) ... the rest of the world is allowing (international crude oil) prices to get reflected in retail prices ...You have to let it (international rates) pass on to the consumers.”
ORF’s Ashok Dhar, a former Reliance executive, said allowing global trends to reflect in domestic pricing would result in petrol rates being further lowered by Rs 1.58 a litre and diesel by Rs 2.93 per litre in Delhi.
The political establishment’s opposition to fuel price deregulation was articulated by CPM’s Dipankar Mukherjee. “You cannot leave it to the market to decide,” he said and wanted retail prices to reflect cost of crude, refining and marketing expense.

Govt oilmen flock to private sector cos

TOI Chennai News dtd 10-02-09

Jeeva TNN

Chennai: But in the oil sector the story is different. Despite fears of a global recession, officials of governmentrun oil companies continue to join private sector which offer better pay package. Sources said IndianOil Corporation (IOC), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and ONGC lost around 1,000 officials to their private competitors last year.
In Chennai alone, ONGC lost 15 officials from geology and geophysics divisions to companies like Reliance, Hardy Oil and Cairn Energy. Some even joined firms in Kuwait and Malaysia. Those who left have 20 to 25 years of experience.
Officials said attrition rate was on the rise in ONGC. 370 middle and senior level officials quit last year compared with 307 in 2007.
According to sources, around 600 officials of IndianOil, BPCL and HP quit in the last two years. Most of them geologists, geophysicists, production engineers, drilling engineers and reservoir engineers and from finance and marketing division.
“There is job insecurity in private sector because of the economic crisis but we can get higher pay package. As most of the branches in the oil sector are specialised fields and those who are working in oil PSUs are well experienced, private companies offer salaries five times of what we are drawing now,” said an IndianOil official.
To cope with the increasing attrition rate at higher levels, IndianOil is recruiting 500 officials, source said. However, many senior officials in oil PSUs said their companies were recruiting only at the entry level and freshers cannot fill the vacuum at higher levels.
Many officials are awaiting a pay revision which the Centre is expected to be announced soon. “Though even a pay revision cannot positively match the salaries in private sector, we want it should be satisfactory to some extent. Otherwise, attrition would inevitably go up,” said a senior official with ONGC.
Last month, oil company officials went on a two-day strike demanding the Centre to revise their pay scales without any delay. When the government took out newspaper advertisements saying they were drawing a month salary of Rs 1 lakh to Rs 2 lakh and their agitation was unreasonable, around 100 officials in the city filed applications under Right To Information Act seeking details to justify its statement. According to them, the government resorted to ‘false’ propaganda as most of the officials in oil PSUs who have been working for 20 to 25 years were drawing Rs 50,000 to Rs 55,000.

Monday, February 9, 2009

Cricketers for Sale - Money Flies!!

On sale were 50 cricketers, all overseas players. Till a day ago, the perception was largely that the buyers would flinch. But India Inc proved it all wrong. By the time the auction got over, Lalit Modi, IPL chairman, could hardly stop smiling. “It is just amazing, great,’’ he kept saying. At the end of the two-hour process, around $7.67 million — a whopping Rs 37.5 crore — had been spent on buying just 17 players. Recession? What recession? IPL doesn’t have any recession,’’ a bidder was heard saying.

After the auctions got over, the celebrities lurked around, chatting about cricket for a change. “It looks like fun. Sure, it is fun. But it’s also business. What went on inside was fierce bidding,’’ Wadia said.

That such big business got done was almost impossible to believe, given the party atmosphere. Speaking of parties, a lavish one awaited them all, hosted by liquor baron Mallya.

The above front page news item on TOI dtd 7/2/09 makes us think?
In an economic system Money does not get created nor destroyed, it only changes hands, unless the Govt wants to push in more money by printig more!. Say the world is one system then the total money would be constant in it. Will it not be?

What happens is that money changes hands, from one person to another, from one country to another, from stocks to banks and vice versa. When we hear recesssion and nobody buying anything it only means people who can buy have either lost their money to others or are just holding on to their money and certainly those who have taken the money of the former group, if that is so, are also holding on to their money and not spending. Hence Recession means less expenditure.

If money is constant then question arises where does the rich get their money from? Where did Vijay Mallya get his money from? And why then does he ask Govt of India to bail out his ailing Airlines at the cost of Public Money either through direct monetary packages or indirectly through interest free credit supplies of ATF from Oil PSUs which are already reeling with losses?

Whose money are we spending Mr Mallya and Ambani, even if you say it is your well earned money, where did the money get produced and come from?

When money is getting concentrated only in the hands of 5% of Indians.. or the rich of the world (the % fig is appxmt) then why will there not be discontent?

Army People too Unhappy with Salaries!!

Army people too are unhappy with salary increase. The only people who are happy are the ones who run this country because for themselves they increased their pay as they wanted!
Friends whether it is Congress or BJP, or anybody else they are all same when it comes to keeping promises. Read this news item. And what media does? They pit an Army man against Oil Sector Officers on Zee TV and the army man too gleefully declares the Oil Strike demands unreasonable.. We wonder how much he was paid for saying that? And when his own brethren are unhappy too! & Why do you think they do not protest? It is only becasue of their disciplinary code.. or else are they Happy with the Govts? or the Bureucrats?

TOI, Chennai: 8th Feb 2009:
Army veterans to return medals To Protest Against Govt Apathy Over Pension Today Rajat Pandit TNN New Delhi: Soldiers wear their medals with immense pride and honour. To lose them can be a gutwrenching and traumatic experience, but that is precisely what many of them will voluntarily do on Sunday.

A “large number” of ex-servicemen will return their gallantry awards and distinguished service medals to the President after a protest rally at Jantar Mantar in the Capital on Sunday in sheer disgust at the non-implementation of the “one-rank, one-pay (OROP)” principle as well as the “raw deal” given to armed forces by the 6th Pay Commission.

Among them will be Colonel (retired) Kanwar Bhardwaj and his wife, Shiksha, who will surrender the Shaurya Chakra awarded posthumously to their son, Captain Umang Bhardwaj, who died battling heavily-armed terrorists in Jammu and Kashmir in 2002. While the protest may resolve around pension, it has melded with the growing unease over continued apathy towards the services who, unlike their civilian counterparts, are bound by the disciplinary code not to protest.

Incidentally, even demands of serving military personnel over their new revised pay scales are yet to be fully resolved by the government. The creeping sense of being left behind now seems to have grown into powerful resentment, dissolving the distinctions of rank and hierarchy.

The jawans and havaldars who are coming for the protest have the support of their former bosses. “The country is not recognising the pillar which supports it,” said former Navy chief Admiral Sushil Kumar.

Added Col Bhardwaj, “The status of the armed forces, which are keeping the country safe, has been systematically downgraded by bureaucrats and politicians.


Ex-servicemen demand pay and pension on ‘One Rank One Pay’ basis as promised by different political parties in their election manifestoes.

Veterans claim that the Sixth Pay Commission has created four ranks within a rank — pre-1996, post-1996 to Dec 2005, post-Jan 2006 to Sept 2008 and post-Oct 2008.

Now, a havaldar who retired before 1996 draws less pension than a sepoy who retired after 2006.

The UPA government has rejected the demand, citing huge financial costs — over Rs 3,500 crore, with annual liabilities of Rs 700 crore.

The estimate includes payment of arrears from January 1, 1996, when the recommendations of the Fifth Pay Commission came into effect.

We’ve been pushed to the wall: Ex-servicemen
New Delhi: “We love India but we have been pushed to the wall. My wife will return my son’s Shaurya Chakra, while I will surrender my Sena Medal, awarded for gallantry in 1971,” said Col Bhardwaj. This was the general mood a day before a large number of ex-servicemen go to the Rashtrapati Bhavan to return their gallantry awards and service medals. They are returning them in protest against the non-implementation of “one-rank, one-pay” and the “raw deal” armed forces got by the 6th Pay Commission.

Former Army deputy chief Lt-General (retd) Raj Kadyan said, “My medals are my proudest possession but I will hand them over to the President, the supreme commander of the armed forces, for safe-custody till our demands are met.” The ex-servicemen feel they have been hoodwinked by successive governments on OROP despite virtually all political parties promising its implementation in their manifestos, election after election.

The governments, in fact, have even brushed aside recommendations by parliamentary committees to swiftly resolve “the disparity of pensionary benefits between pensioners of the same rank” without much ado.

The UPA government, on its part, has rejected the OROP demand, holding that it will entail huge financial costs — well over Rs 3,500 crore, with annual liabilities of around Rs 700 crore. This estimate takes into account payment of arrears with effect from January 1, 1996, the date from which the recommendations of the 5th Pay Commission were effective. “It’s also not possible to implement OROP due to administrative reasons and possible repercussions from the civil side, public sector and autonomous bodies,” said a defence ministry official. [comments: These people will always cite fear about the other groups!! What prevents them to make everybody happy? when they take care of themselves!!!]

Ex-servicemen, however, beg to disagree. Tenets of justice demand that defence personnel of the same rank and length of service should get the same pension, irrespective of the retirement date, says the vice-chairman of the Indian Ex-Servicemen Movement (IESM), Major-General (retired) Satbir Singh, who will also return his Sena Medal on Sunday.

“But after the 6th Pay Commission, the government has created four classes within a class — pre-1996, post-1996 to December 2005, post-January 2006 to September 2008 and post-October 2008,” he said.

“For instance, a havildar who retired before 1996 draws less pension than a sepoy who retired after 2006, and a Lt-Gen draws less pension than a Lt-Col. Ex-servicemen have been on a relay hunger strike at Jantar Mantar since December 16 but nobody listens to us since we are not a votebank,” he added.

But political parties better watch out. Defence pensioners alone notch up a tally of around 20 lakh, with another 55,000 being added to it every year. If one adds family members, over one crore people in India are directly connected with defence personnel or ex-servicemen.

Maj-Gen Singh said four former chiefs — General VP Malik and Admirals Sushil Kumar, Madhvendra Singh and Arun Prakash — “had promised their support” to the rally on Sunday.

The ex-servicemen feel they have been hoodwinked by successive governments on one-rank, one-pay (OROP) despite virtually all political parties promising its implementation A The UPA government has rejected the OROP demand, saying it will entail well over Rs 3,500 cr, with annual liabilities of Rs 700 cr .

Govt meddles with Performance Appraisals in PSUs

The Govt first does not increase salaries as expected...now it pre-determines how many outstanding performers can be there in a PSU.. How can performance be pre-determined? By fixing a cap on how many people can be marked as Outstanding Performers, are they not actually suppressing performance. On one hand this Govt talks of performance linked pay and on other hand they are putting a cap!!

Incidentally this is a part of Rao Commission Report.. and this too should have been objected by OSOA.. and all PSU associations!!

POLICYCentre reworks appraisal system for PSU staff5 Feb, 2009, 1055 hrs IST, Sushmi Dey & Dheeraj Tiwari, ET Bureau

NEW DELHI: The government is putting in place a performance management system in public sector companies to have a uniform mechanism for distributing performance-linked bonus to employees. At present, these companies have their own parameters for rewarding executives.

“The second pay revision committee proposed to develop a robust and transparent performance management system for central public sector enterprises (CPSEs). The proposal has found favour in the government. The department of public enterprises and other administrative ministries are now working in conjunction to put the new system in place,” a department of heavy industry official, who wished not to be named, said.

Under the new system, the government will ask CPSEs to adopt a “Bell Curve Approach” while grading its executives, he said. Only 10-15% of the executives in a public sector undertaking will be graded as “outstanding or excellent” in their performance appraisal. According to the new system, about 10% of officers in a company would be graded as “below par”, he added.

Some companies have a similar appraisal system. “We already have a sophisticated performance management system in place, which is much like the new one that the government has prescribed,” Bharat Heavy Electricals (Bhel) chairman and managing director K Ravi Kumar said. According to a Bhel official, the company is the first PSU to implement electronic network-based paperless appraisal process. In Bhel, the executives set key result areas (KRAs) and targets for themselves, which are assessed and revised every year by a committee.

When the new system is in place, all CPSEs will be mandated to sign MoUs with their respective controlling ministries. The MoU rating will then form the basis of performance-related pay for executives in these companies. “CPSEs that do not enter into MoU will not be eligible for any performance-related pay,” the official said.