Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
5 October, 2014
Message by
Secretary, Department of Public Enterprises...................... 05
Chairmans Desk............................................................................ 06
Articles
Role of PSEs in Developing Women Leaders...................... 08
by Dr. U. D. Choubey
Enhanced Duties, Responsibilities and Liabilities of........ 11
Directors - Companies Act 2013
by Ms. Alka Kapoor
Corporate Social Responsibility: Saviour of........................ 20
Socio-Economic, Environmental & Governance Issues
by Dr. B. B. Goel
One Person Company (OPC) -.................................................. 24
A modified Corporate form to boost entrepreneurship
by Prof. Pankaj Varshney
The New Companies Act.:.......................................................... 27
Step towards better Governance
by A. K. Rastogi
Appointment of Directors under the.................................... 30
Companies Act, 2013 Issues for CPSEs
by Inderpal Singh
Companies Act 2013: Boosts Corporate Governance...... 35
by H. L. Chaudhary
Related Party Transaction (RPT) under................................. 39
Companies Act 2013 and Revised Clause 49
of the Equity Listing Agreement
by Ms. Kumudani Sharma
Corporate Social Responsibility.............................................. 47
as Provisioned in Companies Act 2013
by Rakesh Sinha
Contents
PSE News
PSEs News....................................................................................................60 - 93
ADVISORY BOARD
Dr. U.D. Choubey, Director General
S. A. Khan, GM (HR & CA)
U.K. Dikshit, Adviser (Programmes)
K. N. Dhawan, Adviser (CC)
& Consulting Editor
EDITOR
Nisha Sharma
PUBLISHER
A. S. Khan
Total Pages : 96
Annual Subscription: Rs. 500/Price per copy : Rs. 50/-(Payment may be sent by
Chairman's Desk
to accelerate the expansion and
growth of our economy, enactment of new legislation had become a sine-quo-non.
Starting with a concept paper put
on the ministrys website on 4th
August 2004, the journey of the
new legislation ended on 29th
August 2013, with assent of the
Honble President, striving to
make Indian corporate environment more transparent, simple
and globally acceptable.
he Enactment of the
Companies Act 2013 has
ushered in a new era for
Corporate India. The landmark
legislation has introduced several
new concepts and seeks to encourage transparency, accountability
and high standards of corporate
governance.
The earlier Act was in need of a
substantial revamp for quite some
time, to make it more contemporary and relevant to corporates,
regulators and other stakeholders in India. When the same was
enacted, that is nearly six decades
earlier in 1956, there were only
around 30,000 companies. This
number is more than nine lakhs
now. The Indian economy has
since then, experienced substantial expansion and growth. The
change in regulatory structure for
corporate sector had become necessary to address issues relating
to regulatory harmony, recognition of good corporate practices
and technological improvements.
To meet the challenges posed by
the changed national and international business environment and
Indias business.
With respect to the PSEs too, there
are several challenges being witnessed w.r.t. implementation of
the new Act. In Companies Act
1956, there were certain exemptions/ relaxations applicable to
Government Companies, which
were provided taking into account
the special framework applicable
to them. We are well aware that
the method of selection and appointment of a Chairman and full
time Functional Directors of PSEs
are being done through a process
established by the Government.
The terms of appointment and the
remuneration is also laid down
by Government. These are some
of the issues for which adequate
provisions will have to be made so
that mandatory provisions for the
PSEs are followed.
Today, public sector enterprises
have emerged as global giants and
their contribution to the national
economy has been well acknowledged. In the context of Companies
Act 2013, when the rules of the
game for Government companies
and other than Government companies differ in many aspects, I
am sure, concerns of PSEs in aligning the various guidelines which
are applicable to them would be
looked into on priority.
I am happy that SCOPE has very
appropriately brought out a special issue of KALEIDOSCOPE
devoted to this important subject.
This will certainly provide valuable insight into various aspects
of the new Act and their potential
implications.
C.S.Verma
Chairman, SCOPE
Vice President Shri M. Hamid Ansari (centre) releasing the book Untold Story of the Indian Public
Sector. Standing on his left are Dr. M. B. Athreya, Management Guru and Dr. U. D. Choubey, DG, SCOPE.
Standing on his right are Mr. C. S. Verma, Chairman SCOPE & Chairman, SAIL and Mr. S. K. Ghai, MD,
Sterling Publishers Pvt. Ltd.
he Vice President of India Shri M. Hamid Ansari released a book entitled Untold Story of the Indian
Public Sector authored by Dr. U.D. Choubey, the Director General of Standing Conference of Public
Enterprises (SCOPE) during a function held on 14th October, 2014 at the Vice Presidents House in
New Delhi. Dr. U. D. Choubey, Director General, SCOPE delivered the Welcome Address. Dr. M. B. Athreya,
Management Guru also addressed the function and focused on reforms in public sector enterprises. Mr. S.
K. Ghai, Managing Director, Sterling Publishers Pvt. Ltd. proposed vote of thanks.
Addressing on the occasion, the Vice President said that in our country, people in high positions remain
shy in sharing their experiences. Dr Choubey has done a commendable job in penning down his vast experience in Public Sector. The book throws light on various aspects of working in Public Sector Enterprises
. He congratulated the author for bringing out such a useful book for enlightenment of people.
The book provides a clear presentation of the overall environment and workings of the
Public Sector that the author
experienced. It is up-to-date,
often forthright, and futuristic. Millions of young men and
women today aspire to join
the esteemed ranks in Indian
Public Sector to contribute to
the creation of a new nation.
Unfortunately, over the years
the Public Sector has seen tremendous denigration.
ARTICLE
Role of PSEs in
Dr. U. D. Choubey
Developing
Women Leaders
ender diversity has emerged as an essential element for growth and competitiveness of the economies.
Globally, the call for gender diversity in board rooms has been
growing momentum. There is
increasing sensitivity on the issue
around the world and accordingly, various policy measures and
legislations have been enacted.
Some countries have introduced
quotas to increase womens participation in decision making
process while others have taken
voluntary measures to integrate
womens professional insight
and expertise into board room
discussions.
In India, a welcome step has come
in the form of the Companies Act,
2013. The act provides for atleast
one women director on the board
of every listed company within a
period of one year from the date
of enactment of the new legislation or 3 years for other companies with prescribed share
capital/ turnover. Further, SEBI
has aligned its regulations with
Companies Act, 2013.
Indian corporate sector has actually welcomed the legislation as
they are of the view that this would
bring the much needed gender
diversity in the board room and
would certainly provide a fresh
8
ARTICLE
are unable to take up directorship
in various companies due to conflict of interest.
Realizing the same, the Indian
corporate sector is making all efforts to scout the most talented
and suitable woman in order
to absorb her in their company.
However, with the limited/ restrictive pool of skill specific
women, HR agencies and Indian
companies in general are finding
it very difficult to find the right
mix of qualification and experience and hence are looking at
bringing woman directors from a
wide gamut of industrial base including government agencies, audit firms, consultancy firm, nonprofit organizations, academic
and research institutions.
Role of PSEs
It has been time and again seen
that public sector enterprises
(PSEs) in the country have been
fulfilling dual objective of socio economic development of
the country as a whole. One of
its most important social objectives was to provide and generate employment to both men and
women.
This can be seen from data published by Ministry of Labour and
Employment1 (the Ministry)
wherein, though the percentage
of people seeking employment in
public sector (including central
government, state government,
quasi (central) government, quasi (state) government and local
bodies) declined by 1.8 percent
in 2011 in comparison to 2010 as
against employment in private
ARTICLE
conducted by The Times Insight
Group in 2012 (the study) of
30 BSE companies. In the study
it was found that out of 30 companies, 17 companies had atleast
one women director, of which
four companies were public sector companies (i.e. 23 percent of
the total sample size). Also, there
was only one company which had
4 women directors and that company was a public sector company. Further, out of three companies having 2 women directors,
one was a public sector company.
In addition, the gender-diversity
ratio (i.e. number of women directors vis-a-vis companys total
board size) was the highest at
23.5 percent that too of a public
sector company. It may also be
further noted in 2013, the highest
position in a PSE i.e. Chairman
and Managing Director (CMD)
position of two ratna enterprises were also filled by women
employees.
Besides providing women with
leadership roles, public sector
has also been active in promoting
forums for common discussions
for women. For this purpose
Women in Public Sector (WIPS)
has been formed under aegis of
Standing Conference of Public
Enterprises (SCOPE) to ensure
holistic development of women
at large in PSEs.
From the above it is apparent that
PSEs have been strongly committed to women empowerment not
only in words but also in action.
However, much more needs to be
done especially in light of developing women leaders.
For this purpose it is important
that beyond their technical and
professional expertise, they need
to be trained in strategic and international business management.
Also mentoring programmes/
10
ARTICLE
Enhanced Duties,
Responsibilities and
Liabilities of DirectorsMs. Alka Kapoor
Jt. Secretary, ICSI
he accountability of the
board of directors has always been an issue for
strengthening corporate governance. The Financial Aspects of
Corporate Governance (Cadbury
Report), 1992 states that The
formal relationship between the
shareholders and the board of
directors is that the shareholders
select the directors, the directors
report on their stewardship to
the shareholders and the shareholders appoint the auditors to
provide an external check on the
directors financial statements.
Thus the shareholders as owners
of the company elect the directors
to run the business on their behalf
and hold them accountable for its
progress.
Article VI of OECD Principles
of Corporate Governance begins
with injunction that the Board
members should act on a fully
informed basis, in good faith,
with due diligence and care, and
in the best interests of the company and the shareholders. The
board should apply high ethical
standards.
Kumar Mangalam Birla Committee Report on Corporate Governance (2000) highlighted the
Duties of Directors
Directors have so far played two
roles in a business environment.
11
ARTICLE
associates.
A director shall not assign
his office and any assignment so
made, shall be void.
The efficacy of any regulation depends on measures to put a curb
on violation of the provisions of
the said regulation. With hefty
penalty, the profound duties
embedded in the Act itself is the
picture of what is expected from
the directors. This provision is
aimed at infusing a new sense
of understanding, commitment
and responsibility in the directors who constitute the boards of
Indian companies. This will keep
them on their feet and they shall
perform a more active role in the
best interest of the companies and
all the stakeholders.
12
ARTICLE
which is a joint statement by all
directors and includes:
Adherence to accounting
standards
Affirmation by the Board that in
preparation of annual accounts,
the applicable accounting standards had been followed, and
where there were departures,
proper explanation had been
given.
Responsibility of Enhanced
Disclosure
The Act requires enhanced disclosures with respect to Boards
Report, Prospectus, AGM notice,
Annual return, directors responsibility statement, audit committee constitution, vigil mechanism.
It is the responsibility of the directors to ensure that all disclosures
mandatorily required under the
Act are given appropriately.
Responsibility to establish
Vigil Mechanism
The Act provides that every
listed company or prescribed
class or classes of companies shall
establish a vigil mechanism for
directors and employees to report
genuine concerns. This mechanism shall provide for adequate
safeguards against victimisation
of persons who use such mechanism and make provision for
direct access to the chairperson
of the Audit Committee in appropriate or exceptional cases. The
details of such mechanism are
to be disclosed by the company
on its website, if any, and in the
Boards report.
Corporate Social
Responsibility
In our country, while many corporate houses have been traditionally engaged in doing CSR activities voluntarily, the new CSR
provisions of the CA Act 2013,
put formal and greater responsibility on companies to set out
clear framework and processes to
ensure strict compliance.
Sec 135 of the new Act provides
that every company having net
worth of Rs 500 crore or more,
or turnover of Rs 1000 crore or
more or a net profit of Rs 5 crore
or more during any financial year
shall constitute a Corporate Social
Responsibility Committee, which
is to be a Committee of the Board.
The Board is responsible to ensure that the company spends the
mandatory CSR on specified CSR
activities in accordance with the
CSR policy of the company and
disclose the CSR policy and CSR
activities of the company as specified in the provisions.
13
ARTICLE
Key Managerial Personnel of a
company shall enter into insider
trading except any communication required in the ordinary
course of business or profession
or employment or under any law.
Section 194 relates to prohibition
of forward dealing in shares and
debentures of the company.
ARTICLE
company as well as steps taken
by the company to cure instances
of non-compliances.
Every director including independent director is therefore advised to ask following questions
to ensure compliance with good
governance:
Responsibility of
Independent Directors
for the Prevention and
Detection of Fraud
acting within authority, assisting in protecting the legitimate interests of the company,
shareholders and its employees
Immunity to Independent
Directors under the
Companies Act, 2013
Sub-section (5) of Section 149 of
Companies Act, 2013 provides
that an independent director, can
be held liable only in respect of
such acts of omission or commission by a company:
which had occurred with his
knowledge attributable through
Board processes, and
with his consent or connivance; or
15
ARTICLE
the Boards and shall not act as
Chairman of more than 5 committees/sub-committees of the
Boards across Boards of CPSEs
companies in which he/she is a
director. Furthermore, each nonofficial director should inform
the company about the committee/ sub-commit-tee positions he/
she occupies in other companies
and notify change(s) as and when
they take place.
Duties of Non-Official
Directors in CPSEs
The Ministry of Heavy Industries
and Public Enterprises came
up with draft Model Role and
Responsibilities for Non-Official
Directors on the Board of CPSEs
on 28th December, 2012 later
modified on 20th June, 2013. The
16
ARTICLE
deliberately conceals any material facts, to induce another person
to invest money
Deposits had been accepted
with intent to defraud the depositors or for any fraudulent
purpose.
Where business of a company has been or is being carried
on for a fraudulent or unlawful
purpose, every officer of the company who is in default shall be
punishable for fraud
Furnishing
of
False
Statement (Section 448): If in
any return, report, certificate, financial statement, prospectus,
Comparative Analysis of Penal Provisions under Companies Act 1956 & Companies Act, 2013
Section
Particulars
No Provision
a) Imprisonment - six
months to ten years and
b) Fine 100% to 300% of
the amount involved in the
fraud
34
a) Imprisonment - six
months to ten years and
b) Fine 100% to 300% of
the amount involved in the
fraud
36
a) Imprisonment - six
months to ten years and
b) Fine 100% to 300% of
the amount involved in the
fraud
42
Contravention of provisions of private placement: where the company makes an offer or accepts
monies being non- compliant of
the provisions of the section
75
No Provision
a) Imprisonment - six
months to ten years and
b) Fine 100% to 300% of
the amount involved in the
fraud
every officer of the company who was responsible for the acceptance
of such deposit
100
17
ARTICLE
102
Statement to be annexed to
notice of general meeting: appropriate disclosure in the statement
annexed to notice of annual
general meeting.
No penal provision
Promoter, director,
manager or other key
managerial personnel
127
128
129
137
Appointment of directors:
Contravention of section 152, 155,
156 relating to appointment of
director and furnishing DIN
165
Number of directorships:
Acceptance of appointment as a
director in contravention of the
provisions of this section i.e. 10
in case of public companies and
maximum 20 companies
166
No provision
Director
159
18
ARTICLE
167
Director
184
Director
194
No provision
Director or KMP
195
No provision
Director or KMP
Conclusion
The duties of directors are partly statutory, partly regulatory
and partly fiduciary and their
responsibilities are quite onerous and multifarious. The Board
It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.
- Josiah Charles
19
ARTICLE
With enactment of Companies Act (Section 135) and Rules notified on 27.2.2014, India has
become the only country in world with legislated, self regulated & self compliant CSR.
Corporate Social
Responsibility
ARTICLE
business is to increase its profits.
However, Robert Dahl countering these views observes Today,
it is absurd to regard the corporation simply as an enterprise
established for sole purpose of
allowing profit making. We,
the citizens, give them special
rights, powers and privileges, on
the understanding that their activities will fulfill our purposes.
Corporations exist because one
allows them to do so. And we
allow them to exist only as they
continue to benefit us. In short,
an enterprise owes a debt to be
given back to society from which
it has amassed huge profits.
21
ARTICLE
Indian companies or profit arising from branches outside India.
While the Act used CSR merely
as nomenclature, Rules provide
clear cut definition, scope and application. It allows companies to
engage in activities in Schedule
VII or projects/programs undertaken by Board of a company in
pursuance of recommendations
of CSR Committee as per declared
CSR policy. It implies flexibility
to choose preferred engagements
that are in conformity with CSR
policy (Finance Ministers budget
speech incorporating slum redevelopment in CSR). Similarly,
although contributions towards
disaster management are not
covered in list of CSR activities,
companies spending on relief
meant for flood hit J&K facing a
humanitarian disaster of enormous proportion, have been permitted to do so. Besides, Ministry
of Corporate Affairs has rightly
rejected Finance Ministrys proposal under the same Cabinet
Minister to exempt banks from
2% mandatory CSR norms owing to their capital constraints.
Otherwise, this would have
opened a pandora box for other
entities to come up with such
lame excuses.
The Board has to constitute three
members CSR Committee including one independent director (exception private/unlisted companies having two directors). The
Committee forms a core team,
formulates CSR policy, recommends amount of CSR spend and
develops operating structure and
monitoring mechanism for implementation. A comprehensive
report on CSR containing specified particulars based on comply
or explain framework has to be
annexed with annual report of
Company. Besides, companys
22
Clarifications on CSR
Policy Rules 2014
In light of varying views expressed by industry, professionals and academia, Ministry
of Corporate Affairs has clarified provisions under Section
135 as also amended/substituted
Schedule VII (notification dated
18.6.2014):
Schedule VII entries are
broad based and illustratively
mentioned in Annexure.
One of the events, like marathon/awards/contribution/advertisement/TV sponsorship are not
CSR expenditure.
Expenses for fulfillment of
any act/ statue ( labour law, land
acquisition) or expenditure in
normal course of business or any
program exclusively for benefit of
employees/families are not CSR.
Efficacy of CSR
CSR has made great inroads
in SBI, LIC, IOC, SAIL, NTPC,
ONGC, BHEL, CIL and other
public enterprises.
ARTICLE
In order to oversee companies
CSR initiatives, Coal India Board
recently cleared a proposal to
raise new cadre of 120 officers. It
would however, be a novel idea
if all CPSEs form an independent
entity under DPEs umbrella having scale and resources to plan
and execute CSR activities and
free themselves from this responsibility. Pooling of funds has a
multiplier impact than an individual CPSE can achieve.
CSR has become a buzz word in
job market. Companies have to
attract brightest talent to achieve
CSR activities. Accordingly, CSR
course as a part of MBA can be
introduced to build a think tank
of CSR professionals, consultants
and specialists. While New Delhi
Institute of Management has
made a debut in sensitizing students, move of Indian Institute of
Corporate Affairs to launch nine
months CSR program is laudable.
recommends amount of
CSR spend and develops
operating structure and
monitoring mechanism for
implementation.
Unlike Section 135, CSR rules
broaden the term company to
the one incorporated in India including a foreign company having branch or project office thereby inviting judicial scrutiny.
The Act prefers CSR spending in local area. If a company
has more than one operational
office (factory, corporate office),
there is ambiguity as to which
location has to be target. Besides,
rural poor may not be benefitted.
The Act prescribes identified
set of activities in Schedule VII
while CSR activities in Rules are
illustrative and not exhaustive.
The State under CSR garb
passes the buck towards social
development to private sector.
Rules
exceed
Delegated
legislation as companies issue
cheques (PM Relief Fund) instead
of carrying out activities on the
ground.
Section 37(1) of Income Tax
Act explicitly allows business expenditure if it is wholly or exclusively for business. Accordingly,
23
ARTICLE
One Person
Company (OPC)
Prof. Pankaj Varshney
Associate Professor (Finance)
Lal Bahadur Shastri Institute of
Management
ARTICLE
been defined by the Companies
Act, 2013 as a company which
has only one member (or shareholder). Any natural person
who is resident of India for more
than 182 days in the preceding
calendar year may subscribe to
the Memorandum and Articles
of Association of an OPC. The
Memorandum should also name
another person a nominee, who
shall, in the event of the death of
the subscriber or his incapacity
to contract, would become the
member of the company. Such
nominee is required to give his
consent in writing. The nominee
can however, withdraw his written consent at any time he wishes
to. Similarly, the member shareholder may also change nominee
at any time, and replace him/her
with another nominee. The Act
provides for the liability of member to be limited by shares, or
guarantee or it may be an unlimited liability company. The minimum paid-up capital of an OPC is
required to be Rs. 1 Lac. Further,
the company would have to mention One Person Company in
brackets below its name in all its
communications and signages.
As per Section 149 (1)(a), the minimum number of directors in an
OPC is one, although there is no
bar on appointment of more than
one director.
Only natural Indian residents are
allowed to become shareholders
of an OPC, which means that body
corporates or foreigners cannot
set-up an OPC. No person is allowed to incorporate or become a
nominee of more than one OPC.
A minor is also not allowed to become a member or a nominee in
an OPC or hold shares with beneficial interests.The law lays down
certain restrictions that have been
imposed on the type of activities
Conversion of a Private
Limited company into an
OPC and vice versa
A private limited company (other
than a company registered under
Section 8 of the Companies Act,
2013 i.e. a Not-for-profit company) with a paid-up capital of `
50 Lacs or less or an average turnover of ` 2 crore or less, may convert itself into an OPC by passing
a Special resolution at its AGM.
Before passing such a resolution,
25
ARTICLE
Act, 2013. It is also exempt from
preparing and presenting the
Cash Flow Statement as part of
its Financial Statements under
Sec. 2(40), while it is mandatory
for other types of companies. As
per Section 92(1), an OPC may get
the Annual Return to be signed
by the Company Secretary or in
his absence, by the Director of the
company. Similarly, the Financial
Statements need to be signed by
only the Director and submitted
to the auditors.
As a one person company with
only one director, requirement of
holding quarterly board meetings
is not necessary. It is sufficient
enough to record the resolutions
in the minutes book and signed
by the Director. It would be sufficient if at least one board meeting is conducted in each half of
a calendar year and the gap between the two meetings should
not be less than 90 days. Also, the
requirement of quorum for Board
meetings will not apply in case
of OPCs. The Directors report of
an OPC needs to include only explanation of qualifications or adverse remarks of the auditors and
not all the other information as
required by Section 3 needs to be
included.The provisions relating
to sending of notice atleast 7 days
prior to Board meeting, participation through video conferencing or other audio video means
also do not apply, if the OPC has
only one Director on its Board.
The provision relating to the appointment of an individual as an
auditor for more than one term
of five consecutive years and an
audit firm as an auditor for more
than two terms of five consecutive years shall not apply to OPC.
Thus, the process of incorporating and running an OPC is
relatively simpler than a private
26
ARTICLE
Mr. A. K. Rastogi
Step towards
better Governance
27
ARTICLE
outstanding loans, debentures
and deposits, exceeding Rs. 50
Crore are required to have at
least two independent directors.
The new act also prescribes a time
limit of one year for compliance.
Section 149 (6) of the Companies
Act, 2013 defines Independent
Directors and criterion of independence are more stringent
than the criterion envisaged earlier under the Listing Agreement.
Now
independent
directors
must, among other things, be
person of integrity, possess expertise and experience, not be a
promoter of the company or the
holding or associate company,
not be related to the promoter or
directors of the company, or the
holding or subsidiary or associate company, whose relatives not
have any pecuniary relationship
or transaction with the company
or the holding or associate company and neither he nor any of
his relatives hold any key managerial position in the company or
the holding or associate company.
Thus, Independent Directors are
expected to be completely unrelated to the company or its shareholders. Nominee Director are
kept outside from definition of
Independent Director.
Further, Schedule IV of the new
Act contains the guidelines
for professional conducts for
Independent Directors, role &
responsibilities of Independent
Directors, their duties and manner of appointment etc. These
measures have been introduced
with intention to ensure that the
independent directors shall act
in the interest of the company
and with no partiality towards
management.
Women Director
Every listed company and public
28
Role of Directors
The Companies Act, 2013 has
brought a paradigm shift by considerably enhancing the role of
the directors individually and
Board collectively. The Board of
Director is no longer a mere apex
decision making body. The new
Act introduces some new concepts which have increased the
ARTICLE
Particulars
Audit
Committee
Nomination
and Remuneration
Committee (NRC)
Applicability
Company having:
Minimum 3 or more
Non-Executive Director of
which at least shall be
independent.
To be decided by Board.
Chairperson shall be a nonexecutive director and such
other members as may be
decided by the Board
Minimum 3 Directors of
which at least 1 shall be
Independent.
Constitution
Liability of Directors
The new law assumes directors
and key management personnel
to be the sentinels of governance.
New Act intended to ensure involvement of every Director in
the Governance of the Company
and Section 149(12) specifically
provides that a non executive director including an independent
director and nominee directors
will be held liable in respect of
such acts of omission or commission by a company which had
occurred with his knowledge,
attributable through board processes and with his consent or
connivance or where he had not
acted diligently.
The new Act intends to ensure
that directors should exercise
diligence while making decisions
and the act intends to achieve the
same by providing huge penalty for defaults and enhanced
criminal liability under various
provisions.
The Act provides for liability of
Directors in his personal capacity
Stakeholder
Relationship
Committee (SRC)
Corporate Social
Responsibility
Committee (CSRC)
net worth of Rs.500 crores
or more; or
turnover of Rs.1000 crores
or more; or
net profit of Rs. 5 crore or
more during any FY
Establishment of Vigil
Mechanism: (Section 177)
The new Companies Act also
mandated establishment of a
vigil mechanism for Directors
and Employees to facilitate reporting their genuine concern/
grievances. The Audit Committee
shall oversee this mechanism.
As per the Act, following companies required to establish vigil
mechanism:
Listed companies
Companies accepting deposits from public
Companies that have borrowed moneys from Banks/PFIs
over Rs. 50 crores
Conclusion
The provisions regarding Directors, meetings, Committees of
the Board, Boards report etc.
envisaged under the Companies
Act, 2013 will have effect on
the decision making & disclosure practices being followed
by the Companies. The new law
will plug most loopholes of the
old Act and it will improve
corporate governance, protect the
interest of minority shareholders
and make it tougher for companies to hide illegal transactions or
commit fraud.
29
ARTICLE
Appointment of
Directors under the
Companies Act, 2013
entral
Public
Sector
Enterprises (CPSEs) are
important vehicles of inclusive growth in the country.
CPSEs account for around 20%
of GDP of the country in terms
of turnover and make substantial contribution towards employment generation & Central
Exchequer. In 2012-13, gross revenue from operations of all CPSEs
stood at Rs. 19.45 Lakh Crore
whereas more than Rs. 1 Lakh
crore of overall net profits have
been earned by them (PE Survey
2012-13). As on 31st July, 2014,
Listed CPSEs holds more than
15% of total market capitalization
in BSE as well as NSE.Government
of India being the majority shareholder in CPSEs, the process of
appointment of Directors has
certain peculiarities not to be
found in other non - Government
Companies. Besides, Board and
shareholders of CPSE, the government agencies involved in
30
Formalities prior to
appointment DIN,
Declaration & Consent
Section 152 requires a proposed
Director to furnish his Director
Identification Number (DIN) and
a declaration that he is not disqualified to become a director under the Act. The Section further
states that he shall not act as a
director unless he gives his consent to hold the office as director.
Disqualifications for appointment
of director have been listed in
Section 164 of the Act.Exemption
available under the Act of 1956
ARTICLE
to Government Companies with
regard to one of the disqualifications under Section 274(1)(g) viz.,
failure to file annual accounts or
to repay deposit/ interest/ dividend or to redeem debenture
is not available to CPSEs under the new Act till now. At the
time when appointment process
is initiated at Administrative
Ministry/DPE, it is important to
ensure that the person proposed
to be director is not subject to
any of the disqualifications listed
in Section 164.
Suggestion
Before putting up the proposal
of appointment of a person as
director to ACC, the person concerned should be asked to furnish the declaration that he is
not subject to any disqualification under Section 164. If the
person concerned is already a
director in other companies, it
can be verified from Ministry of
Corporate Affairs (MCA) website
that whether any of those companies has not filed financial statements or annual returns for any
continuous period of three years,
one of the disqualifications mentioned in the Section. It would
be helpful, if the Administrative
Ministrys communication of appointment to person concerned
as director advises him to obtain
DIN in case he is not having one.
Further, CPSE needs to ensure
before inducting the person on
the Board that his DIN, consent
to act as Director and declaration
as to not being disqualified are
obtained.
Issue @ 2
Appointment of Key
Managerial Personnel
(KMP) including CFO
Companies Act 2013 introduced
Suggestion
Supporting the first view above,
it is suggested that an information memorandum citing above
provisions regarding KMP may
be put up to the Board of CPSE
specifying that all whole time directors (currently in position) in
a CPSE will be KMP as second
view may result in a situation in
a CPSE where Director (Finance)
would be a KMP but Director
(HR) or Director (Operations)
may not be a KMP. Further, the
memorandum above may also
provide that Director (Finance)
may be considered as CFO
for the purpose of Section 203
[Director (Finance) is considered
CFO for the purpose of CEO &
CFO certification under Clause
49-Listing Agreement applicable
to Listed Companies. For future
appoint-ments, it would be better
if appointment letter of Director
(Finance) from Administrative
Ministry indicates that he would
be CFO of the company as well.
Issue @ 3
Appointment of
Independent Director
Procedure in CPSEs vis-vis responsibility of Board
under Companies Act, 2013
Companies Act, 2013 entrusts
greater responsibility on the
Board of a company to ensure
that appointment of Independent
Director is justifiable and in compliance with the provisions of
the Act which include a strict
criterion of independence under
Section 149(6). In addition to long
list of cases given in Section 149
(6) under which a person cannot be independent director,
DPE guidelines on Corporate
Kaleidoscope October 2014
31
ARTICLE
Governance & Clause 49-Listing
Agreement (for listed CPSEs) are
also required to be kept in mind
which includes an additional
point to ensure that the person
is not a material supplier, service
provider or customer or a lessor
or lessee of the company, which
may affect his independence.
The Section also provides that an
independent director means a director who, in the opinion of the
Board, is a person of integrity and
possesses relevant expertise and
experience. Further as per Section
150 and Section 152, the Board
has to certify through explanatory statement to the shareholders that Independent Director
fulfills criteria of independence
and his/her appointment is justifiable. Since all Directors including Independent Directors on the
Board of Government Companies
are appointed by the President of
India through ACC and CPSEs
Board comes into picture on receipt of communication from
Administrative Ministry regarding appointment of independent
director with instruction to induct him/her in the Board, true
compliance with above provisions is going to be a challenge for
the Board of CPSEs.
Further, the Code for Independent
Directors provided in Schedule
IV of the Act mandates that the
appointment of Independent
Director shall be formalized
through a letter of appointment
which shall, inter-alia, set out
term of appointment, fiduciary
duties, list of action that a director
should not do, remuneration and
expectation of the Board from the
appointed director, Board Level
Committees in which the director is expected to serve & its tasks
etc. Presently, communication
from Administrative Ministry
32
Suggestion
Compliance with above provisions requires greater involvement of the Board of CPSE in the
appointment process and better
connect between various arms
of the government (viz., Admin.
Ministry, DPE & ACC) and the
CPSE.
Specifically, following
suggestions may be considered
for compliance of above provisions in true letter & spirit: Since the Board of CPSE is
responsible for certifying to the
Shareholders that appointment
of Independent Director is justifiable and he/she meets the criteria
of independence as laid down in
the Companies Act 2013 (as well
as DPE guidelines on Corporate
Governance), it is in the fairness
of things that Board should be
given an opportunity to consider the proposed appointment of
Independent Director before the
same is put up to ACC. Thus, the
Board of CPSE need to be given a
larger role to play as against the
present practice of just inducting the Independent Director appointed by ACC on the Board of
CPSE.
So far as due diligence
from CPSE side with regard to
appointment of Independent
Director is concerned, it generally consists, as per present
practice, seeking comments of
the company management by
Administrative Ministry with regard to possible conflict of interest with the business of CPSE.
However, as explained above,
now the due diligence should
go much beyond in ensuring
(besides no conflict of interest)
that (i) proposed appointment
of Independent Director is justifiable; (ii) proposed candidate
fulfills criterion of independence
under Section 149(6); and (iii)
the proposed candidate is not
disqualified under the Act. All
this is complex and need to be
ensured before the appointment
is approved by ACC. Besides
taking a self-declaration from the
person (proposed to be appointed as director) with regard to (ii)
& (iii) above, DPE may consider
forming a Committee of internal/external experts to carry out
this due diligence. This will on
the one hand, ensure compliance
with the requirements of the Act
and on the other, give more credibility to the process of appointment of Independent Directors in
CPSEs. This Board of CPSE can
cite this due diligence as support
of their assertion to shareholders
that Independent Director fulfills
criteria of independence and his/
her appointment is justifiable.
With regard to detailed appointment letter for Independent
Director, it is suggested that
CPSE may prepare a draft appointment letter containing details envisaged in the Act and got
it approved from Administrative
Ministry. Since, the details contain fiduciary duties, Dos & Dont
for Independent Director, expectation of the Board from the
ARTICLE
appointed director etc., to ensure
uniformity, DPE may consider a
standardized format in this regard to be issued by administrative ministries at the time of communication of appointment of
Independent Director to a CPSE.
Issue @ 4
Suggestion
So far as requirements as to
minimum number of independent directors are concerned in the
Act as well as Listing Agreement,
immediate steps need to be taken
by government agencies involved
in the process to put forward
proposals for appointment of sufficient number of independent
directors as many CPSEs are in
non-compliance of these requirements. The process of appointment of independent directors
also needs to be compressed. It
is also important because grant/
exercise of Navratna/Maharatna
status has also been linked by
the Government with fulfilling
SEBI requirement of minimum
number of independent directors on which CPSE has no control at present. Since, the Board of
Directors of CPSE are responsible
for ensuring compliance in this
regard, DPE may consider giving
some power to Board of CPSEs at
least to appoint independent directors to meet statutory criterion
of one-third independent directors under the Act if the vacancy
is not filled for a certain period,
say 6 months.
With regard to skill requirement under the Act, it is important
Retirement of directors by
rotation in CPSE
Section 152 of the Act provides
that unless the articles provide
for the retirement of all directors
at every annual general meeting,
not less than two-thirds of the total number of directors of a public
company shall be persons whose
period of office is liable to determination by retirement of directors by rotation. It further states
that one-third of directors liable
to retire by rotation shall retire
at every AGM. The Act also provides that Independent Directors
are no longer liable to retire by rotation. Further, as per provisions
of Articles in many CPSEs, CMD
& Government Directors are not
liable to retire by rotation. This
may lead to a situation where it
may not be practically possible to
comply with the provisions of the
Act as the directors available for
liable to retire by rotation will be
less than two-third.
Suggestion
In view of the fact that above provision may not be practicable in
CPSE (as explained above) and
also of the fact that generally all
directors in a CPSE are appointed by Government of India for a
33
ARTICLE
fixed tenure, CPSEs need to be
exempted from these provisions
of the Act. Till then, CPSE may
not have any option but to go
for retirement & re-appointment
of one-third of two third of total
number of directors (excluding
independent directors) in the
AGM whether such two-third is
actually available for retirement
or not.
Appointment of
Government Directors
Suggestion
Suggestion
Issue @ 6
Disclaimer: The Views expressed in the article are those of the author and do not necessarily reflect the opinion of the company or any other Govt. agency. Your valuable comments on the article are welcomed at inderyours@gmail.com.
34
ARTICLE
Mr. H. L. Chaudhary
CMD, NPCC
Increased Reporting
Framework
Mandatory requirement
for Consolidated Financial
Statement (CFS)
As per globally accepted practices, consolidated financial statements are considered as basic financial statements and the only
general purpose financial statements, as standalone financial
statements do not present a true
and fair picture of an economic
entity. So requirement of consolidated financial statements is an
important step with primacy of
standalone financial statements
has been maintained.
35
ARTICLE
of the original cost of the asset.
The Companies Act 2013 states
that it will for specific companies
(whose financial statements are
required to comply with accounting standards prescribed under
the Companies Act 2013), the
useful lives should normally be
in accordance with the Schedule.
However, if a prescribed company uses a different useful life, it
should disclose a justification for
doing so;
ARTICLE
and intervals for conducting and
reporting on internal audit. The
objective of introduction of this
requirement is to strengthen the
system of internal controls in the
wake of allegations of recent corporate frauds. The Companies Act
2013 also requires the Directors
Report for listed companies and
Auditors Report for all companies to comment on whether the
company has adequate internal
financial controls system in place
and operating effectiveness of
such controls.
Audit Committee
Role of the Committee sharpened
with specific responsibilities including recommending appointment of auditors and monitoring
their independence and performance, approval of related party
transactions, scrutiny of intercorporate loans and investments,
valuation of undertaking/assets
etc. Audit committee is contemplated as a major vehicle for ensuring controls, sound financial
reporting and overall good corporate governance.
Period of appointment of
Auditors
As per the Companies Act 2013,
instead of the present provision
of appointment from one AGM
to the next, individual or a firm to
be appointed as auditor for a fiveyear term. Change of auditors
before the five year term would
require special resolution after
obtaining the previous approval of the Central Government.
Further the auditor concerned
would have to be given a reasonable opportunity of being heard.
Company Social
Responsibility mandatory
Rotation of auditors
Listed companies or companies implementation
belonging to such class of companies as may be prescribed cannot appoint or reappoint an audit
firm (including an LLP) as auditor for more than two consecutive
terms of five years each (in case of
an individual there would be one
term of five years).
Wider Director
and Management
Responsibility
Responsibility of Directors/
Independent Directors
Specific but inclusive duties of
Kaleidoscope October 2014
37
ARTICLE
Ministry of Water Resources) to
create necessary infrastructure
for economic growth of country and to undertake Irrigation
and hydel projects. As per new
Companies Act 2013 NPCC Ltd
ensures adherence to CSR activity
works, financial declaration/ auditing, Risk Management with its
mitigation, transparency in working and adopting all criterias
required to comply with New
Companies Act 2013
Role of the
Committee sharpened with specific
responsibilities
including recommending appointment of auditors
and monitoring
their independence
and performance,
approval of related
party transactions,
scrutiny of intercorporate loans
and investments,
valuation of undertaking/assets etc.
Audit committee is
contemplated as a
major vehicle for
ensuring controls,
sound financial
reporting and overall good corporate
governance.
ARTICLE
Related Party
Transaction (RPT)
Introduction of Section 188 of the Companies Act 2013 and Revised Clause 49 of the Equity
Listing Agreement of the Stock Exchange, to be effective from 01.10.14 has thrown a big
challenge to the Corporate Sector to ensure their compliance. This article analyses the
provisions of the Act and Revised Clause 49 and suggest the Road map for the future.
inistry of Corporate
Affairs vide its notification dated 26.03.14
made section 188 applicable to
companies w.e.f from 01.04.14.
The Section does not prohibit
RPT; but channelizes the transactions by prescribing certain compliance requirements. Provisions
relating to RPT apply to every
company, be it a private, unlisted
public, listed public or foreign
company.
Related Party
Section 2(76) of the Act defines
the term related party with
reference to a company. This
definition was brought into force
with effect from 12-09-2013. In its
terms, related party means: a director or his relative; The
term relative with reference to
a person means any one who is
related to another, if- (i) they are
members of a Hindu Undivided
Family; (ii) they are husband and
wife; or (iii) one person is related
39
ARTICLE
any company which is- (A) a
holding, subsidiary or an associate company of such company;
or (B) a subsidiary of a holding
company to which it is also a
subsidiary;
Associate company on relation to
another company, means a company in which that other company has a significant influence, but
which is not a subsidiary company of the company having such
influence and includes a joint
venture company. Significant
influence means control of at
least 20% of total share capital
or of business decision under an
agreement.
and a director or KMP of the
holding company or his relative
with reference to a company.
Its Frequency
ARTICLE
1956 or the Act.
In terms of section 462 of the
Act, the Central Government has
the power to grant exemption to
any company or class of companies or modify the application of
any provision of the Act. If any exemption is granted by the Central
Government or the provisions of
the Act are modified in exercise of
the powers vested in the Central
Government under section 462
of the Act, any such transaction
even if falling within the nature
of transactions mentioned above,
will not be a RPT. As on date,
such Exemption is awaited from
Government.
Not all transactions with related
party are Related party transactions under the Companies Act
2013. Related party transactions
by virtue of the provisions of section 188 of the Act are limited to
seven types of transactions specified in sub-section (1).On the other hand, transactions with related
party comprise all transactions
when the two contracting parties
are related in the manner specified in section 2(76).
Approvals
RPT involving the transactions
mentioned in above shall have to
be entered into with the consent
of the Audit Committee Section
177(4) and Board accorded by a
resolution passed at a meeting.
Where any director is interested
in any contract or arrangement
with a related party, such director
shall not be present at the meeting
during discussions on the subject
matter of the resolution relating
to such contract or arrangement.
The words shall not be present
at the meeting during discussions
on the subject matter of the resolution shall be construed to refer
41
ARTICLE
company, its subsidiary company or associate company at a
monthly remuneration exceeding
two and half lakh rupees as mentioned in clause (f) of sub-section
(1) of section 188; or
is for remuneration for underwriting the subscription of
any securities or derivatives
thereof, of the company exceeding one percent. of the net worth
as mentioned in clause (g) of subsection (1) of section 188 at Para 3
above.
Explanation: (1) The Turnover or
Net Worth referred in the above
sub-rules shall be computed on
the basis of the Audited Financial
Statement of the preceding
Financial Year.
It is further clarified under the
said Rule that, in case of wholly
owned subsidiary companies ,
the special resolution passed by
the holding company shall be sufficient for the purpose of entering
the transaction between wholly
owned subsidiary and holding
company. This implies that subsidiary company need not get
special resolution passed by its
shareholders.
Ministry of Corporate affairs by
General Circular No. 30/2014
dated 17-07-2014 has clarified
that related party has to be
construed with reference only to
the contract or arrangement for
which said special resolution is
being passed.
Section 188(3) provides that
Where any contract or arrangement is entered into by a director or any other employee, without obtaining the consent of the
Board or approval by a special
resolution in the general meeting under sub-section (1) and if
it is not ratified by the Board or,
42
Rule 15 of the Board Rules prescribes the procedutre to be followed in respect of contract requiring consent of the Board at a
meeting of the Board. Passing the
resolution by circulation is not
permissible in this case.
Ministry of Corporate
Affairs vide its notification dated 26.03.14
made section 188
applicable to companies w.e.f from
01.04.14.The Section
does not prohibit
RPT; but channelizes
the transactions by
prescribing certain
compliance requirements. Provisions
relating to RPT apply
to every company, be
it a private, unlisted
public, listed public
or foreign company.
ARTICLE
name of the related party;
name of the director or KMP
who is related, if any;
nature of relationship;
nature, material terms, monetary value and particulars of the
contract or arrangement; and
any other information relevant or important for the members to take a decision on the proposed resolution.
Other conditions
Every RPT entered into by the
company shall be referred to in
the Boards report to the shareholders along with the justification for entering into such contract or arrangement.
Contracts or arrangements with
related party with respect to RPT
shall be entered into in the register maintained by the company in
Form MBP 4.
The entries in the register shall be
made at once, whenever there is
a cause to make entry, in chronological order and shall be authenticated by the Company Secretary
of the company or by other person authorised by the Board in
this behalf.
The register shall be kept at the
registered office of the company and preserved permanently
in the custody of the Company
Secretary or authorised person.
Upon a request being made by a
member, the company shall provide extracts from the register
within seven days from the date
of request upon payment of such
fee as may be specified in the articles of association of the company
not exceeding Rs. 10/- per page.
Fresh approvals for past contracts
under section 188 Ministry of
Corporate Affairs vide circular
43
ARTICLE
the commencement of Section
188 of the Companies Act, 2013,
will not require fresh approval
under the said section 188 till the
expiry of the original term of such
contracts.
General Circular 32/2014 dated
July 23, 2014, however appears
to be in line with SEBI circular dated 17.04.14 on Corporate
Governance in listed Entities
Para 4.2 of the said circular states
that all existing material related
party contracts or arrangement
as on date of this circular which
are likely to be continue beyond
March 31, 2015 shall be placed for
approval of the shareholder in the
first General Meeting subsequent
to October 01, 2014. However
company may choose to get such
contracts approved by the shareholders even before October 01,
2014
Another view could be that
General circular No. 31/2014 dated 17.07.2014 deals specifically
with section 188 hence it shall
prevail and no fresh approval
should be required under the Act.
Penal Provisions
a policy on materiality of
ARTICLE
influence over the other party,
directly or indirectly, in making
financial and/or operating decisions, such party will be considered to be related to the other.
A person shall be a related party
to a company, if either himself or
a close member of his family: - (a)
is related to the company as per
the definition under section 2(76)
of Act; or (b) has control or joint
control or significant influence
over the party; or (c) is a KMP of
the company or of a parent of the
company.
The expression a close member
of his family is not either defined/explained in the Act or in
the revised Clause 49.
An entity is related to a company
if: the entity is a related party as
per the definition under section
2(76) of the Act; or
both the entity and the company are of the same group
(which means that each parent,
subsidiary and fellow subsidiary
is related to the others) or;
one entity is an associate or
joint venture of the other party
(or an associate or joint venture of
a member of a group of which the
other party is a member) or;
both parties are joint ventures
of the same third party; or
one entity is a joint venture of
a third entity and the other entity
is an associate of the third party;
or
the entity is a post-employment benefit plan for the benefit of the employees of either the
company or an entity related to
the company. If the company is
itself such a plan, the sponsoring
employers are also related to the
company; or
45
ARTICLE
Comparative Position under the Act and the Listing Agreement
Companies Act 2013
Definition of the
Related Party
Particulars
Definition of RP
Audit Committee
More Stricter
Board
-Required - RPT
below the limits specified post facto approval is
possible
More Stricter
Exceptions
Ordinary course of
Business /Transaction at
arms length
No such Exceptions
More Stricter
Same
Remark
ARTICLE
Corporate Social
Responsibility as
Provisioned in
Mr. Rakesh Sinha
47
ARTICLE
Greater accountability of
Board of Directors
The Act entrusts greater responsibility on the Board of Directors,
empowers them while at the
same time making them more accountable. The role of Directors
becomes even more crucial as
economies today compete to attract capital and good governance
plays a decisive role when investors look for safe places to invest.
To delve further into the evolved
role of the Directors, we need
to understand the impact of
48
ARTICLE
proper systems to ensure compliance with all applicable laws and
that such systems were adequate
and operating effectively. Given
the complexity in the Indian
Regulatory Environment, the
Board would have to set up a robust compliance framework to be
able to demonstrate diligence on
their part. The Directors report
should also indicate the development and implementation of a
risk management policy, including identification of risk elements
which, in their opinion, may
threaten the companys existence.
Currently, these requirements are
applicable to listed companies
through Clause 49. Going forward, they will apply to all companies unlisted public companies as well as private companies.
What is uniformly visible throughout the Act is that a number
of these disclosures which were
hitherto covered elsewhere have
been brought under the ambit of
Directors Report. The underlying objective is to bring to notice
of the Directors those important
governance issues which get relegated to periphery only to resurface in the form of a crisis at an
inopportune moment.
Immunity to Non-Executive
Directors
The Board is collectively responsible for the disclosures made in
the Directors Report and non-executive directors are also equally
accountable and responsible.
However, the NEDs have an umbrella of immunity which can
be opened only when they have
been diligent in the performance
of their duties and have not consented or connived in a statutory
violation. Active participation in
board meetings, robust controls
Clause 49 vs CA 13
The revised Clause 49 (C 49)
which is effective from October
1, 2014 prescribes stricter requirements for listed companies. There
are overlaps at several places
causing confusion, duplication
and contradiction. SEBI received
representations from companies
and industry associations, highlighting certain practical difficulties in ensuring compliance. The
recent amendments to Clause 49,
issued on September 15, 2014,
provide a welcome respite for
India Inc. SEBI has rationalized
the approval process for related
party transactions (RPTs) by allowing omnibus approval for repetitive transactions. Insistence
on prior approval of all related
party transactions was threatening to have adverse business
consequences.
While harmonization has happened in several areas, the lack
of it persists in areas like voting on related party transactions, pecuniary relationships for
Independent Directors etc. We
are therefore still a long distance
away from a consistent and harmonious regime which promotes
corporate governance without
stifling business. The MCA and
SEBI have to jointly work towards
ironing out conflict and overlap.
49
ARTICLE
ARTICLE
Related party transactions
The 2013 Act has both, widened
the coverage of related parties as
well as tightened the approval
norms.
Wider coverage of related parties
and transactions
The coverage of related parties under the 2013 Act is much
wider than that in the 1956 Act.
The definition of key managerial
personnel (KMP) and directors
under the 2013 Act covers all directors and the chief executive
officer, chief financial officer, and
company secretary. Further, the
relatives of these directors and
officers are also covered, irrespective of whether they are financially dependent on the officer or
director or whether they may be
expected to influence, or be influenced by, that officer or director
in his/her dealings with the company. Further, the list of related
parties also includes the directors
and key managerial personnel
of the holding company (including ultimate holding company),
together with their relatives. The
list of related parties also could
include partnership firms, companies, & other body corporates,
where a director of the company
may have an interest. As a result,
the list of related parties would
now cover a much wider set of
entities and individuals, and may
at times seem counterintuitive.
For instance, a private company
in which an independent directors brother owns shares would
now be a related party, and any
transaction with such an entity
would be subject to approvals
under the 2013 Act.
Approval process and self
governance model
As per the 2013 Act, the Audit
parties to ease their implementation. However, without the concept of financial dependence being brought into the definition of
a relative, the list of related parties still remains quite unwieldy
for companies to handle.
Impact on government
companies
In the context of public sector
companies, the current definition
of related parties would make
all PSEs related to each other, as
a result of their common ownership by the government; it makes
it impractical for government
companies to even gather a list
of their related parties and monitor compliance. While the SEBI
and the RBI have recognised this
issue and provided adequate exemptions to government companies, the corresponding exemptions under the 2013 Act are yet
to be notified; these would need
to be notified by the MCA under Section 462 of the 2013 Act.
Similarly, there are several other
provisions applicable to government companies, which have not
been carried forward in the 2013
Act, and would possibly need to
be exempted through the aforesaid notification.
Misleading statements to
investors and others
While the 1956 Act permitted action to be taken against the company and its directors for untrue
or misleading statements made in
a prospectus, the 2013 Act now
permits any person, group of persons or any association of persons
affected by any misleading statement or the inclusion or omission
of any matter in the prospectus to
file a suit or initiate any other action, including action under section 447; this section deals with
51
ARTICLE
frauds, and prescribes the related
penalties;a minimum imprisonment of three years in matters
involving public interest, which
may extend up to 10 years and a
minimum fine that is equivalent
to the fraud amount or a maximum of three times the amount.
The views and opinions herein are those of the author and do not necessarily represent the views and opinions of KPMG in India.
52
ARTICLE
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funsZk ij fdlh Hkh daiuh ds f[kykQ
/kks[kk/kM+h ds vkjksiksa dh tkap kq: dj
ldrk gSA bl laLFkk ds ckjs esa lcls
[kkl vkSj vge ckr ;g gS fd oks
tkap ds nkSjku fdlh Hkh vU; fu;ked
o tkap ,tsalh ls lwpuk ekax ldrk
gSA ,slk izko/kku igys ugha FkkA u,
daiuh esa feys bl vfrfjDr vf/kdkj
ls ,lvkbZ,Qvks T;knk kfDrkkyh
vkSj izHkkoh cu dj mHkjk gSA daifu;ksa
dks lqpk: pykus esa bl ckr dk Hk;
cuk, j[kuk csgn t:jh gS fd muds
dkedkt ds gj rjhds ij fuxjkuh dh
O;oLFkk gSA
daifu;ksa ds dkedkt dks lkQ lqFkjk
vkSj ikjnkhZ cukus ds fy, u, dkuwu
esa ,d vkSj izHkkoh dne mBk;k x;k
gSA og gS lacaf/kr daifu;ksa ds lkFk
dkjksckj djus esa T;knk ls T;knk
tkudkjh lkoZtfud djus dk fu;eA
vc dksbZ Hkh daiuh fcuk funskd cksMZ
dh eatwjh ds lacaf/kr ikfVZ;ksa ls fdlh
Hkh rjg ds lkSns esa ugha mrj ldrhaA
,d fufpr jkfk ds ckn ds lHkh
lkSnksa ds fy, daiuh dks vke lHkk
cqykdj foksk izLrko ds tfj, mldh
eatwjh ysuh gksxhA bl dne dks vkSj
l[r cukrs gq, ;g Hkh r; dj fn;k
x;k gS fd bl foksk izLrko ij ,slk
dksbZ lnL; erkf/kdkj dk mi;ksx
ugha dj ldrk ftldk ml lkSns ls
fdlh Hkh rjg dk ykHk tqMk gksA
daifu;ksa ds lapkyu ds fy, t:jh
cuk, x, ;s lHkh mik; bl daifu;ksa
ds funskd cksMZ ds lnL;ksa dh
ftEesnkjh c<+k nsrs gSa rkfd lacaf/kr
ikfVZ;ksa ds lkFk gksus okys dkjksckj
esa ,d fufpr ikjnfkZrk cukbZ j[kh
54
;g r; gS fd u, daiuh
dkuwu us daifu;ksa ds lapkyu
ds rkSj rjhds cny fn, gSA
gkykafd ljdkjh daifu;ksa
ds ekeys esa xousZal cgqr
cM+k eqk ugha gSA lkB lky
ds bfrgkl esa ikjnfkZrk esa
deh ;k fuoskdksa ds fgrksa
ls f[kyokM+ dk kk;n gh
dksbZ cM+k elyk gqvk gS
ftlus lkoZtfud mieksa
ds dkedkt ij fdlh rjg
dk nkx yxk;k gSA bl
ekeys esa ljdkjh daifu;ksa
us geskk viuk Hkjkslk dk;e
j[kk gSA ysfdu vc ;g vkSj
t:jh blfy, Hkh gks x;k gS
D;ksfd vc bl ekeys esa vkSj
lrdrkZ cjrus dh t:jr gSA
daifu;ksa ds csgrj lapkyu
ds lkFk vxj lkekftd
nkf;Roksa dk fuoZgu gksrk gS
rks lkoZtfud mieksa dk
fodkl Hkh rst gksxkA
ARTICLE
x;k gSA ftu daifu;ksa dk usVoFkZ ikap
lkS djksM+ :i;s gS] lykuk VuZvksoj
,d gtkj djksM+ :i;s rd gS vkSj os
gj lky de ls de ikap djksM+ :i;s
dk equkQk ;fn vftZr djrh gSa] rks
mUgsa bl fu;e dk ikyu djuk gksxkA
daiuh dkuwu ls bl jkfk ds bLrseky
vkSj csgrj ca/ku ds ko/kku Hkh fd,
gSA daifu;ksa dks ,d dkjiksjsV lksky
fjLikaflfcfyVh desVh dk xBu djuk
gksxk ftlesa daiuh ds de ls de rhu
funskd lnL; gksxsaA bu lnL;ksa esa Hkh
,d Lora= funskd gksuk vfuok;Z gSA
ljdkj us ;g dne blfy, mBk;k
gS rkfd daifu;ksa dh lh,lvkj
xfrfof/k;ksa dks lgh fnkk nh tk
lds vkSj mu ij ikjnkhZ rjhds ls
fuxjkuh j[kh tk ldsA tgka rd
lkoZtfud mieksa esa lh,lvkj
xfrfof/k;ksa dk loky gS] oks dkQh
igys ls blesa ;ksxnku dj jgs gSaA
cfYd lkoZtfud mie foHkkx rks
rhu lky igys ljdkjh daifu;ksa ds
fy, fnkkfunsZk Hkh r; dj pqdk
FkkA ysfdu vc ljdkjh daifu;ksa dks
Hkh u, daiuh dkuwu ds ko/kkuksa dk
gh ikyu djuk gksxkA blds fy,
lkoZtfud mie {ks= dks vc dej
dluh gksxh D;ksafd bl ekeys esa futh
{ks= us vHkh ls [kqnh dks <ky fy;k
gSA lh,lvkj xfrfof/k;ksa ds ekeys
esa ljdkjh daifu;ksa dk fiNys rhu
lky dk vuqHko crkrk gS fd mUgsa bl
{ks= esa iwjh frc)rk fn[kkuh gksxhA
pwafd lh,lvkj xfrfof/k;ksa ij [kpZ
dkuwuh rkSj ij vfuok;Z gks x;k gS
blfy, mlds lapkyu ds fy, Hkh
ljdkjh daifu;ksa dks mlh rjg ds
;kl djus gksxsaA ,d fjiksVZ ds
eqrkfcd lky 2012 esa nl cM+h
ljdkjh daifu;ksa vius lh,lvkj QaM
dks iwjk [kpZ ugha dj ikbZA bldh
,d otg ekuh xbZ bu daifu;ksa esa
55
SCOPE Launches
Cleanliness Drive under
(On left) Mr. C. S. Verma, Chairman, SCOPE and Dr. U. D. Choubey, DG, SCOPE (on right) paying floral tributes to Mahatma Gandhi,
Father of the Nation.
56
SCOPE News
Mr. C. S. Verma, Chairman, SCOPE administered the Pledge for Cleanliness to the
Employees of PSEs and SCOPE. Also seen in the picture is Dr. U. D. Choubey, DG, SCOPE.
(On left) Mr. C. S. Verma, Chairman SCOPE and (on right) Dr. U. D. Choubey, DG, SCOPE sapling plants during the Launching of
Cleanliness Drive by SCOPE.
57
SCOPE News
(L to R) Dr. U. D. Choubey, DG, SCOPE, Mr. C. S. Verma, Chairman, SCOPE, Mr. Pradeep Kumar, Central Vigilance Commissioner,
Ms. Kusumjit Sidhu, Secretary, DPE & Mr. K. D. Tripathi, Secretary, Central Vigilance Commission.
issues which are matters of concern in CPSEs with regard to vigilance. These inter alia included
issues related to award of contracts; anonymous & pseudonymous complaints and issues
related to individual vigilance.
He suggested setting up of a
Consultative committee to deal
with complex contract issues of
PSEs of above a certain value. He
also mooted the ideas of pre-audit for large tenders.
SCOPE News
(L to R) Mr. Pradeep Kumar, CVC, Mr. C. S. Verma, Chairman, SCOPE, Dr. U. D. Choubey, DG, SCOPE and Mr. B. Ashok, Chairman,
IndainOil addressing the Interactive Meeting.
59
n
accordance
with
the
Government of Indias Swachh
Bharat campaign, PFC organized
a week-long cleanliness drive
61
62
63
64
65
66
67
68
PERSONALIA
Mr. R. R. Mishra
Mr. Om Prakash
Mr. K. K. Parida
joins as CMD
of WCL
takes over as
CMD of SECL
takes over as
CMD of CCI
takes over as
Director (Finance), MCL
69
70
Mr. Narendra Singh Tomar, Union Minister for Mines, Steel, Labour
& Employment inaugurates KIOCLs Pellet Auditorium
Mr. Narandra Singh Tomar Union Minister for Mines, Steel, Labour & Employment
inaugurating KIOCLs Pellet Auditorium
contribute immensely in utilizing these resources in the national interest. CMD, KIOCL
Mr. Malay Chatterjee apprised
the Union Minister on the challenges faced by the Company on
closure of its Kudremukh mines
and sought for his assistance
and patronage of Union Minister
for allocation of a suitable mine
at the behest of the State Govt.
of Karnataka. Mr. Chatterjee
appealed to the Minister for
71
72
r. Thaawar Chand
Gehlot, Union Minister
of SJ&E addressed
the participating MDs of State
Channelising Agencies (SCAs)
of NBCFDC during Annual
Conference cum Review
Meeting recently in SCOPE
Complex at New Delhi. In his
address the Minister, highlighted the need of efficient and effective delivery system for speedy
disbursement of funds to the ultimate beneficiaries. He reiterated
the need of identifying problems
in delivery mechanism so that the
beneficiaries may get loans without any hassle or delay and also
repay in time.
Highlighting the important role
of skill development, the Union
Minister of SJ&E emphasized
that the artisans and handicraft
persons should be exposed to
latest techniques in the areas of
manufacturing and production.
Better designs should be introduced keeping in view the market trend. He also stated that
the State Channelising Agencies
have greater responsibilities to
improve the socio-economic
condition of weaker sections.
The Minister of State for SJ&E
Mr. Sudarshan Bhagat in his address informed that more than 18
lakh Backward Classes families
are assisted by disbursing loans
over Rs.2667 Cr under NBCFDC
Schemes. He emphasized that
women empowerment should be
on the top of the agenda while
implementing schemes of the
Corporation at all levels.
The Minister for Social Justice and Empowerment, Mr. Thaawarchand Gehlot (centre), Mr. Sudarshan Bhagat, State Minister for SJ&E ( 2nd from left) and Mr. Sudhir
Bhargava, Secretary (SJ&E), (2nd from right) releasing the News Letter of NBCFDC.
Mr. A.A. Naqvi, MD, NBCFDC (extreme left) and Mr. B.L. Meena, Joint Secretary (BC),
Ministry of SJ&E, (extreme right) are also seen on the occasion.
73
74
Rao
said
that
despite
75
76
Mr. K.U.Thankachen, MD, CRWC signed agreement with Mr. Prabir Pandey, Member
(Finance & Traffic ), IWAI presence of Mr. Ananda Bose, Chairman, CRWC and other
officers.
Dr. Arup Roy Choudhury, CMD, NTPC and Mr. Ajay Jain, Secretary, Energy, Exchanging
the MoU document.
77
78
Mr. Rajeev Sharma, CMD, REC, distributing Aids and Appliances to Disabled Person.
79
80
Cochin Shipyard Ltd delivers the Fast Patrol Vessel (BY 508) to The Indian
Coast Guard & Platform Support Vessel to PSV Holding Inc., Liberia
MTCs
Festival
of
Gold returned this
festive season from
26th September to 21st October
2014 at MMTCs Showrooms in
SCOPE Complex (Lodhi Road),
Jhandewalan Jewellery Complex
(Rani Jhansi Road), and Cross
River Mall (Shahdara). An additional sale venue at MMTC
Colony Community Centre was
set up in Adhchini. MMTC Ltd.,
is a trusted name in assured purity. On offer were MMTCs complete range of gold medallions
in 999 purity; 1g, 2g, 5g, 8g, 10g,
20g, and 50g, and silver medallions range in 999 purity; 10g, 20g,
50g, 100g, 250g, and 1000g. On
this mega occasion, MMTC also
offered discount up to 30% on its
exclusive Sanchi silverware range
made from sterling silver of 92.5
percent purity.
Kaleidoscope October 2014
81
82
Commissioner of Police,
Mauritius Reviews Fib
Projects At Gsl
Mr. D. I. Rampersad GOSK,
PMSM, Commissioner of Police,
Govt. of Mauritius visited GSL
recently.
During the visit, Mr. Rampersad
had discussions with RAdm
Shekhar Mital, NM (Retd) CMD
83
84
From Left to Right : (Mr. Vishvajit Sahay, Joint Secretary MoHI, Mr. A. K. Jain, Managing
Director, REIL, Mr. Anant Geete, Union Minister of Heavy Industries and Public
Enterprises, Mr. Rajan S. Katoch, Secretary, MoHI, Mr. M. P. Eshwar, CMD, IL Kota, and
Mr. A.K. Deori, Director, MoHI).
85
86
87
88
Mr. A. K. Jain
MD, REIL
Smt Sobanakumari is in a way, a brand ambassador for CSL, has brought in many laurels in past.
She had won altogether 26 Gold medals in the national level athletics championships during last
two decades. Gold medal in 400 meters hurdles
and bronze medal in 4x100 meters relay in the
year 1996, bronze medal in 4x400 meters relay and
silver medal in 4x100 meters relay in 2006 are the
previous achievements of Smt V Sobanakumari in
Asia Master Athletics Championships.
90
Rajasthan Electronics & Instruments Limited, declared 20 percent dividend to its Share Holders
for the year 2013-14, in its 32nd Annual General
Meeting held recently. On this occasion MD REIL,
Mr. A. K. Jain presented statistics for the year 201314, which emphasized that the net worth of the
Company has increased by 15 percent from Rs.
71.58 Cr. to Rs.82.71 Cr, with a record order booking of Rs. 271.77 Cr. The Company has earned a
profit of Rs.19.88 Cr on a turnover of Rs. 217.25
Cr. Ms. Veenu Gupta, Chairman, REIL stated that
Company is maintaining sustained growth & profitability with innovative solutions, harmonious industrial relations and the continuous support of valued customers. Company will scale greater heights
in the days to come. She expressed her sincere appreciation and thanks to the Employees, Business
Associate, Valued Customers and Share Holders.
91
92
Employment, Mr. Narendra Singh Tomar as dividend for the financial year 2013-14, during his visit
to KIOCL Corporate Office in Bangalore.
During the financial year 2013-14, KIOCL reported 35 percent jump in its operational performance with production and dispatch of 1.710 MT
and 1.615 MT of Pellets respectively. Companys
financial performance improved with growth of
32 percent in Gross Income at Rs. 1532.37 crs and
PBT of Rs. 61.40 crs vis--vis Rs.32.34 crs, PAT of
Rs. 39.94 crs vis--vis Rs.31.05 crs thereby recording a growth of 29 percent over the year 2012-13.
he
Central Warehousing
Corporation (CWC) achie-ved
yet another record turnover
of Rs.1528.19 cr during 2013-14
as against Rs. 1406.70 cr earned
during 2012-13, thus recording a
growth of 8.64 percent. The Profit
Before Tax (PBT) and Profit After Tax
(PAT) also increased by 22.58 percent and 15.41 percent respectively
over the preceding year. Keeping in
view the national priority for safe
storage of foodgrains, utilization of
capacity for storage of foodgrains
was given due priority. CWC handled 10.36 lakh TEUs during 201314 despite slump in the IMPEX
trade. During 2013-14 CWC continued to operate Cargo Terminal of
Integrated Check Post (ICP) at Attari
on Indo-Pak border entrusted to
CWC by the Department of Border
Management, Ministry of Home
Affairs. CWC handled 85,484 export/
import trucks as against 74,847 export/import trucks handled during
2012-13 and earned a gross revenue of Rs. 39.28 Cr. during 2013-14
93
94
Chairmans Desk............................................................................ 05
Articles
Project Management: Constraints & Management ......... 06
by Dr. U. D. Choubey
Skilling - The Success Mantra for Public Sector................. 11
by Narayanan Ramaswamy
Changes in Labour Legislation................................................ 14
for the Organized Sector
by Dr. Rajen Mehrotra
State of Economy and CPSEs.................................................... 18
by Kaleidoscope Bureau
What can Prevent a Heart Attack?.......................................... 20
by Dr. (Prof.) Harsh Wardhan
SCOPE News
SCOPE Developing Global Business Leaders in CPSEs.... 24
SCOPE Workshop on Crisis Communication....................... 26
and Media Management
SCOPE Urges for Greater Autonomy to PSEs...................... 30
SCOPE for Services Tax Compliances..................................... 31
SCOPE for Professionalization of PSEs.................................. 32
Indraprastha Media Ratan Award to...................................... 32
SCOPE PR Employee
SCOPE Pays Rich Tribute to Shri Mohd. Fazal...................... 33
SCOPE Programme on Companies Act & IFRS................... 34
SCOPE Convention Centre Facilities................................35-38
Public Service Ethics Needed for Good Governance....... 39
Book Review by Dr. B. B. Goel
PSE News
SJVN Declares Highest Dividend............................................ 17
Steel Minister Visits SAILs Research Wing........................... 43
Echoes PMs Vision
Contents
ADVISORY BOARD
Dr. U.D. Choubey, Director General
S. A. Khan, GM (HR & CA)
U.K. Dikshit, Adviser (Programmes)
K. N. Dhawan, Adviser (CC)
& Consulting Editor
EDITOR
Nisha Sharma
PUBLISHER
A. S. Khan
Total Pages : 72
Annual Subscription: Rs. 500/Price per copy : Rs. 50/-(Payment may be sent by
CHAIRMANS DESK
n more than six decades of existence, the public sector in India has
been the backbone, the growth engine and pillar of strength for the
Indian economy by enhancing value for its stakeholders. Another
hallmark of the PSEs has been adopting best practices in areas such as,
environment management, corporate governance, corporate social responsibility and human resource development. To recognize, encourage
and reward the significant achievements and contribution of PSEs encompassing various facets, SCOPE as an apex body of PSEs,has instituted
SCOPE Meritorious Awards in these Specialized Fields. I am happy to
inform that His Excellency, the President of India, Mr. Pranab Mukherjee has consented to address and present
SCOPE Meritorious Awards 2012-13 to award winning public sector enterprises (PSEs) on 5th November 2014 at
Vigyan Bhawan. Honble Minister of HI&PE along with Minister of State, HI & PE will also address the Chief
Executives and senior executives of public enterprises on this occasion. As this will be a momentous occasion
for the entire public sector fraternity, I request all of you to block the date and time to participate in this award
presentation ceremony.
As you are aware, SCOPE has been taking up issues on behalf of PSEs, harping on the fact that there should be
greater flexibility and freedom to the management of public sector enterprises keeping in view todays increasingly competitive environment. However, many a times, vigilance is cited to propagate a culture of risk aversion
in PSEs, thereby delaying the decision making process and inhibiting performance. SCOPE has firmly believed
and championed the belief that Vigilance is an aid to management and provides a framework to the individuals
to be more alert about any systemic lacunae, which can result in potential inefciencies and higher transaction
costs. To clear the air from policy makers themselves,SCOPE from time to time, has been organizing meetings
of CEOs and Top management of PSEs with Central Vigilance Commissioner. Another apex level meet was
organised on 19th September, 2014. We are grateful to CVC to have kindly consented to come to SCOPE on this
day and interact with CMDs and other senior officials on several key issues related to Vigilance Administration
in CPSEs. I am also happy to note that CMDs and senior officials of CPSEs came in large number which is reflective of the significance of Vigilance in our working. The salient issues which came up for discussion are being
compiled and will be sent to CVC shortly.
I am also happy to share that a major knowledge enhancement initiative launched by SCOPE i.e. Business Quiz
for the employees of the PSEs and financial institutions is going on in full swing. Regional level rounds have
been completed in Mumbai, Kolkata and Bangaluru covering the Western, Eastern and Southern regions respectively. The event saw an overwhelming participation from PSEs which were conducted by a core group of officers from SAIL, NTPC and IOC. It provided a unique opportunity to the managers of public sector to benchmark
their skills with their peers and engage with each other in an environment of healthy competition and hone skills
of lateral thinking, teamwork and decision making.
Developing abetter understanding of global economic environment and international regulatory norms & policiesis mandatory in the present times for the senior management of CPSEs. This would equip the top management of PSEs with the knowledge and the perspective required to operate in a seamless world of business. In
this respect, SCOPE is taking the initiative to form a core group to deliberate on important policy/trade issues
such as WTO & OECD agreements, etc. PSEs have been requested to nominate competent persons for this core
group, which from time to time will brainstorm on important policy matters and the same will be circulated from
SCOPE to CPSEs. This was suggested by Mr Atul Chatruvedi, Chairman, while addressing the participants of
Global Leadership Program, which has been taken up for implementation.
Driven by its mission to promote excellence and global competitiveness of CPSEs, SCOPE is proactively taking
a number of initiatives, on which we once again request feedback and support of all the member companies.
C. S. Verma
Chairman, SCOPE
ARTICLE
Project Management
Dr. U. D. Choubey
CONSTRAINTS
& MANAGEMENT
The growing scale and volume of projects has led to huge monetary investments thereby
increasing the risk of overruns and deviations. Therefore, in recent times, it has not
only become important but also imperative that project management be undertaken
professionally and continually so as to ensure delivery of the project in the most effective
manner. For this purpose it is extremely important that apart from project executors, policy
makers and regulators must also understand the constraints that the projects are struggling
with and accordingly make the environment conducive for project implementation.
Management as a process and activity of planning, organizing, motivating, and controlling resources,
procedures and protocols to achieve
specific goals in scientific or daily
problems.
Project Management
Constraints
Typically, every project involves
four major stages planning, execution, monitoring and evaluation, and closure. In order to ensure proper project management,
it is imperative that appropriate
time is invested in each of the
above stages. However, in actual
practice, projects are plagued
with constraints at each stage of
the project life cycle giving rise to
either cost overrun or time overrun. Sometimes a change in scope
leads to a delay in the project.
In India, a delay in project
ARTICLE
life cycle creates a charter which
includes detailed description of
business needs, desired deliverables and obtaining of appropriate approvals. Hence, it is imperative that appropriate importance
is given to this phase and quality
time is adequately spent so as to
ensure a strong foundation for
the project. The key constraints
during planning are:
Delays in land acquisition
causing schedule overruns: In
India, projects are often awarded
with partial land acquisition (of
as low as 30%) by project owners as against the global practice
where projects are not awarded
unless the process of land acquisition is complete. Partial land
acquisition causes delay in subsequent land acquisition resulting
in lengthening of time in commissioning of the projects. This can
be seen from the fact that 70-90%
of the road projects in India are
delayed on account of issues in
land acquisition.
Reasons for the delay in land acquisition are manifold but they
primarily include resistance from
local community on account of
poor compensation, lack of clarity
on Resettlement & Rehabilitation
policy (R&R) and displacement
of people leading to unemployment. In addition, resistance is
often faced from NGOs and social activists, especially in cases
where land acquisition leads to
felling of trees, displacement of
wild life, destruction of forests reserves or demolition/ destruction
of a heritage site.
Manifold regulatory approvals: In India, it has been seen
that issues pertaining to forest,
environment and wildlife clearances have not only become complex but also time-consuming.
ARTICLE
Scope for change or insufficient management of project design: Lack of detailing and planning fails to account for certain
issues which may lead to change
in project design or scope of the
project. Generally this inability
to conduct proper/ incomplete
topographical or geological studies leads to the creation of situations which may lead to change
in scope. This gives rise to delay
in projects and a possible change
in cost estimates.
Inadequate supply of project management professionals
and skilled labour:
Staff shortage is one of the biggest project challenges. Very often projects have to start without
complete project teams leading
to a delay in project execution.
The key reason for this issue is
that apparently project management is the least lucrative field
with little or no emphasis on providing educational support to
engineering students who want
to specialize in project management as a profession. This has led
to a dearth of managers who are
trained in project handling leading to appointment of project
in-charges who may be technically sound but weak at managerial skills. This has led to a power
vacuum for project management
professionals which are often
filled by foreign professionals
thereby leading to an increase of
project cost.
In addition to project management professionals, lack of skilled
labour has also caused problems
in achieving error-free or breakfree execution of projects. This is
primarily due to a lack of vocational training being provided to
skilled workers.
8
Planning Commission
Project Management in
Public Sector Enterprises
(PSEs)
The key reason for lack of infrastructure in India has been identified as inefficient project management leading to incomplete
or stalled projects which eventually leads to no or delayed infrastructure. This can be seen from
the fact that in the Eleventh Five
Year Plan (2007-2012) (the Plan),
India had set an ambitious target
of INR 20.56 lakh crores (i.e. 7.60%
of GDP) towards infrastructure
investment. On completion of the
Plan (as per the estimates of the
Planning Commission) the actual
infrastructure investment in the
plan was INR 19.35 lakh crores
(7.18% of GDP). In contrast, the
infrastructure investment allocation for the Twelfth Five Year Plan
has been ambitiously increased to
INR 55.74 lakh crores (8.18% of
GDP). The pace of achievement of
the new target can be seen from
the fact that in 2012-13 (revised)
the estimated infrastructure investment was INR 5.34 lakh
crores as against proposed investment of INR 6.99 lakh crores1 .
In addition to this, it may be
worth noting that out of the total
566 central sector projects costing
INR 150 crores or more monitored by the Ministry of Statistics
and Programme Implementation
ARTICLE
(MOSPI), 270 infrastructure projects were delayed for more than
3 years on account of postponing
of their schedules of commissioning. This has resulted in a cost
overrun of INR 65,771 crores to
the government exchequer.
At this juncture, it may also be
noted that infrastructure projects
are not only taken by the government agencies (for development of infrastructure) but also
by PSEs. Time and again PSEs
have invested heavily into projects which have led to infrastructural development of the country.
Every year, PSEs are given an annual capital expenditure target
wherein they are mandatorily required to invest in capital expansion out of their own funds. The
challenge has always been very
steep for the Indian PSEs which is
also reflected in the current years
budget wherein the annual capex
target has been fixed at INR 2.47
lakh crores.
Minimizing Constraints
Now that we have seen the bottlenecks, it is equally important to
understand the possible ways to
de-bottle the same.
Setting up a single-window
clearance through centralization
of multiple governance: In order to expedite project execution
and completion, it is imperative
that the required clearances are
provided within a limited timeframe. For this purpose an effective coordination between varied levels of governments (being
central and state) is mandatory
which can be achieved through a
single window clearance wherein
a centralized process of receipt
and approval of applications for
various clearances and permits
should be adopted. This will
not only simplify the process of
ARTICLE
overruns. Hence, there is a need
to undertake audit of risk factors
and their effective management
in order to ensure effective project implementation.
For this purpose, it is important
that the project management team
be proactive and adopts a structured approach to manage identified risk. This would broadly
involve three major steps risk assessment (identifying risk/ threats
and stakeholders being affected
by it); risk management (evaluating risks, deciding on precautions/ solutions, recording findings and implementing them),
and; risk monitoring/ review
(reviewing of solution and updating, if required). In addition,
the project management team at
the onset should be able to identify possible threats to the project,
the likelihood of their occurrence
and accordingly devise a solution
around that risk so that the threat
can be addressed on time.
Further, the risk audit should not
be a one-time process but a continued one commencing from the
conception of the project, bidding
by contractors and project execution. In order to achieve this, there
should be continuous innovation
in terms of technology or ideas
or business processes so that the
risks can be mitigated.
Developing
human
resources: Primarily, every project
requires two kinds of human resources trained project managers and skilled labour. For this
purpose, it is imperative that the
curriculum for project management be widely introduced in
educational institutes. Moreover
the industry and educational institutes should work in tandem
so as to reduce the supply and
demand gap for trained project
10
management
professionals.
In addition, project managers
should master the art of multitasking which means that they
not only need to master management skills (such as project scoping, issue management, etc.) but
also ensure that the project team
is performance oriented.
Besides project management
professionals, projects at large
face shortage of skilled labour.
Therefore, there is a need to create a pool of readily available
employable workforce through
training and skill development.
The Government has already initiated this process by establishing National Skills Development
Corporation (NSDC) wherein
local people have been encouraged to acquire employable skills.
However, cooperation from the
corporate sector is also needed so
as to absorb the local population
to a large extent in the project and
train them with needed skills.
Centralized
procurement
through accredited vendors:
PSEs and government organizations typically face problems in
procurement of materials as every
government department maintains a separate list of empanelled
vendors through which procurement has to be made. At times
this leads to cost escalation as the
vendors form cartels thereby demanding inappropriate rates or
manipulate the quantity of supply required or compromise on
quality leading to stalled projects. Therefore, there is a need to
prepare a centralized database of
accredited vendors from whom
procurements can be made. The
list should be prepared after fixing certain parameters with respect to material including price,
quality and quantity required to
Conclusion
The growing scale and volume of
projects has led to huge monetary
investments thereby increasing
the risk of overruns and deviations. Therefore, in recent times,
it has not only become important
but also imperative that project
management be undertaken professionally and continually so as
to ensure delivery of the project
in the most effective manner. For
this purpose it is extremely important that apart from project
executors, policy makers and regulators must also understand the
constraints that the projects are
struggling with and accordingly
make the environment conducive
for project implementation.
Alongside, it is also important to
understand that the threats encountered by every project cannot
be resolved by one party/ stakeholder alone; it needs a conscious
and coordinated effort by all towards a common understanding
of improving bottlenecks that
are hampering the achievement
of project completion. Therefore,
a project can only be successful
if it is completed with appropriate planning and controls, and a
right balance is struck between
simplicity and efficiency.
ARTICLE
SKILLING
It will not be possible to train the entire organization and hence skilling programs are likely
to cover a key section of employees. Many a time it covers employees of a particular level of
function. But for an effective change, everyone in the process chain should be trained. Hence
the re-skilling programs should be cognizant of the organizational mapping for the process
that is likely to get impacted. For example if the organization is bringing in e-auction as a
procurement alternative, then it is important that the both procurement person and the
finance person are trained in the process. At the same time, the seniors of these executives,
who perhaps approve the process, should also be trained and skilled in running e-auctions,
handling exceptions and rewarding innovations that teams could introduce.
11
ARTICLE
terms of fresh talent) to bring in
the required capacity and more
importantly, bringing in fresh talent, without preparing the organization to manage such talent,
would be counterproductive. So
the critical and lasting way to
build capacity is to equip existing employees with additional
and contemporary skills. If you
look at any of the success, you
will find a conscious attempt by
the leadership to augment skills
within the organization.
PSUs need to undertake skill augmentation and capacity building
on a war footing. There needs to
be a structured and sustained effort in doing this. Some of the key
elements of the capacity building
are going to be as follows:
Leadership Development
In the liberalization era, PSUs
have taken a distinct course for
themselves and have been able
to play a significant part in nation building. In the past 20 years
the generation that steered these
organizations is slowly retiring,
giving way to modern era leaders. These leaders have started
their professional careers in the
post-liberalization era and may
not have had the grounding of
the some of the current leaders.
Also, the next two decades will
see an unprecedented growth
and lay the foundation for the
modern, resurgent India. Some
key aspects of leadership training
would be:
Formal coaching sessions:
In the older system, there was
an informal gurukula system
where the young leaders learnt
from their leaders from observing
them at close quarters and imbibing some of their key leadership
traits almost intuitively. But in todays age, neither do we have the
12
Blended Programs
Apart from this, the infrastructure for training and skill development is a big concern. After a
lull, we see recruitments happening across PSUs and suddenly there isnt enough training
infrastructure both physical
and faculty for training the new
joiners. Public sector banks have
induction and beginners training program round the clock,
throughout the year and yet have
a backlog. Now there is nobody
who plans for the continuous
training and re-skilling aspects,
ARTICLE
which becomes a game changer
in the current market environment especially for those who
have a large service component.
For example in the past decade,
heavy engineering and industrial engineering has significantly
moved towards electronics dominance and all the mechanical and
electrical engineers need to undergo formal classroom coaching
and re-skilling to be effective. So
is the case with technology and
bankers. Todays bankers need to
know and operate more technology than the technocrat did ten
years back. So a rough calculation for at least 2 weeks of training for all the 50 lakh+ current
employees in PSUs would mean
an overall 2,00,000 man years of
formal training for our PSUs.
Amongst other things, where is
the infrastructure for such training? We need to think innovatively in terms of blended programs where there is innovative
use of classrooms and work places even the home computer and
tablets to deliver effective and
continuous training. An emerging concept that the PSUs need to
examine in detail is that of Work
Integrated Learning Programs
that will seamlessly blend the
regular work with new learnings.
It may be worthwhile to consider
partnering with Universities and
specialized coaching agencies to
achieve this.
Contemporary Curriculum
and Content
Recently I had an opportunity
to visit the training and research
center of one of the largest firms
in India. As the proud center head
was showing their achievements,
I picked up one of the material
suggested for reading. I realized
this book must have been written
Training as an SBU
Public sectors have an additional
burden more often than not to
train smaller private players as
well. PSUs, in my view, should
budget for it and build a robust
training center, which should be
looked at as a profit center. These
centers should act independently
and shall look at having tie-ups
and alliances with reputed educational institutions to lean on
the research and innovation that
happens in the academic world.
They should also look at having a
formal program with assessment
and certification.
Adequate and appropriate skilling of employees could be the
key for PSUs to become the mortar of growth that Jawaharlal
Nehru had envisaged. It is time
they have a formal re-look at
their skilling agenda possibly
look at collaborating within and
also with the academic world in a
holistic fashion.
13
ARTICLE
CHANGES IN
LABOUR LEGISLATION
for the Organized Sector
Dr. Rajen Mehrotra*
It is time that we move with changes in Labour Laws to improve the competitiveness of the
organized sector and ensure not only its survival but also growth, so that the organized
sector can generate employment for the youth of India. We also need to recognize that in a
competitive business environment, certain enterprises will need to go through restructuring
to prevent becoming sick. At the same time certain enterprises that become sick and are
unviable will need to be closed as they cannot continue to live in a comatose situation.
he National Democratic
Alliance (NDA) Government has assumed
office in May 2014. The same
NDA Govt. earlier on 15th Oct.
1999 had appointed the Second
National Commission on Labour
on 15 October 1999 with the following terms of reference:
To suggest rationalization of
existing laws to labour in the organized sector, and;
To suggest an umbrella legislation for ensuring a minimum
level of protection to the workers
in the unorganized sector.
Amendment in Labour
The report of the Second National Laws - Recommendations
Commission on Labour was of the Second National
not implemented though the Commission of Labour for
then Union Labour Minister in organized sector
his meetings with Employers
Organizations, Trade Unions and
various Professional Bodies had
*President, Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers Activities for South Asia with International
Labour Organization (ILO) and Former Corporate Head of HR, of ACC Ltd. and Novartis India Ltd.; E-Mail:rajenmehrotra@gmail.com
14
ARTICLE
Relations Commission (NLRC) to
decide disputes (6.22).
15
ARTICLE
agencies there is a need to take
care of three aspects:
There have to be provisions that ensure that perennial core services are not transferred to other core agencies or
establishments;
Where such services are being performed by employees on
the pay rolls of the enterprises, no
transfer to other agencies should
be done without consulting, bargaining (negotiating) agents;
Where the transfer of such
services does not involve any employee who is currently in service
of the enterprise, the management will be free to entrust the
service to outside agencies.
Contract labour to be remunerated at the rate of regular labour
(6.109).
No worker to be kept continuously as casual or temporary against
a permanent job for more than 2
years (6.110).
One months wage as minimum
bonus. Any demand for bonus in
excess of this up to a maximum
of 20% of the wages will be subject to negotiations. Ceiling for
reckoning entitlement and calculation of bonus be enhanced to
Rs. 7500/- and Rs. 3500/-, respectively (6.113). (NB: The ceiling for
reckoning entitlement and the
calculation of bonus had been
enhanced to Rs. 10,000/- & Rs.3,
500/-, respectively, with effect
from 01 April 2006.)
National Minimum Wage inclusive of DA. The DA to be linked
with CPI, DA revision in every
six months and minimum wage
revised once in five years. Under
the Piece-Rate System employee
to receive at least 75% of notified
time rate, if employer not able to
provide work (6.114, to 6.118).
16
ARTICLE
Conclusion
in the economic and business environment after the Indian economy opened up in 1991. Also there
is a need to review the existing
Labour Law for unviable enterprises, as they cannot continue to
live in a state of comatose. This is
because the labour department, in
most appropriate governments,
refuses to grant permission for
layoff, retrenchment and closure
when the enterprise is employing
more than 100 workers.
Our aim should also be to create an investor-friendly climate
so that the foreign companies,
which are wary of entering India
due to the perception of unfavorable Labour Laws are attracted to
invest in India.
The practice and implementation
of labour should not be such that
the management of an enterprise
or trade union is pressurized by
either party through power play
during wage negotiations with
the appropriate Government
just being a silent spectator. The
Labour Laws should also not be
unfavorable to the labour force,
but it cannot be such that managements of enterprises are held
to ransom by politically interested external trade union leaders.
17
ARTICLE
STATE OF ECONOMY
& CPSEs
- Kaleidoscope Bureau
ARTICLE
payment, interest on government loans and payment of tax
and duties during the year from
Rs 1,62,402 crore in 2011-12 to Rs
1,62,761 crore in 2012-13. This, the
survey said, primarily owed to
increase in contribution towards
service tax and sales duty. There
was, however, a decline in customs duty and excise duty.
Oil and Natural Gas Corporation
Ltd (ONGC), NTPC Ltd., Fertiliser
Corporation of India Ltd, Coal
India Ltd and Bharat Heavy
Electricals Ltd (BHEL) were the
top five profit-making CPSEs.
Meanwhile,
Bharat
Sanchar
Nigam Ltd (BSNL), Mahanagar
Telephone Nigam Ltd (MTNL),
Air India Ltd, Chennai Petroleum
Corporation Ltd, Hindustan
Photo Films Manufacturing Co
Ltd were among the top five lossmaking CPSEs during 2012-13.
Given the above fact, it is almost
clear that while the CPSEs dealing with natural resources are
doing good, but the performance
of those involved in the services
sector are incurring losses. It indicates that they need to catch up
and it has to be done at a faster
pace to be at par with those doing well in the private sector. The
beauty of services sector is that
the business here prospers with
the image of a firm. It is very hard
to get it, the hardest part is perhaps to maintain the image. So
what is wrong with the telecom
services providers and the national carrier?
The survey itself said that the
Indian telecom sector has registered a phenomenal growth during the past few years and has
become the second largest telephone network in the world after
China. A series of reform measures by the government, innovations in wireless technology and
19
ARTICLE
What
can Prevent a
Dr. (Prof.) Harsh Wardhan*
HEART ATTACK?
A diet rich in fruits, vegetables and whole grains can help protect
your heart. Beans, other low-fat sources of protein and certain types
of fishes can also reduce your risk of heart disease. Most people need
to add more fruits and vegetables to their diet five to 10 servings a
day. Eating several servings a week of certain fish, such as salmon and
mackerel, may decrease the risk of heart attack. Those who have high
blood pressure should take less of salt, particularly preserved foods
which are rich in salt content. If one is overweight, the total calorie
intake also needs to be restricted to reduce the weight.
There are two main coronary arteries right and left and they
*
Dr. (Prof.) Harsh Wardhan, Chairman-Cardiology, Rockland Group of Hospitals, New Delhi (former Professor, Consultant & Head
of the Department (Cardiology), Dr. Ram Manohar Lohia Hospital & PGIMER, New Delhi).
20
ARTICLE
insufficient blood during physical
exertion. As a result the patient
gets pain during exertion which
subsides on taking rest. This is
called angina.
Besides chest discomfort on exertion, shortness of breath may
also be a manifestation of blockages in the coronary arteries. If
any coronary artery blocks 100%
suddenly whcih happens due to
the formation of blood clot on
partially blocked coronary artery
myocardial infarction (commonly known as heart attack)
occurs. This total blockage of the
artery cuts off the blood supply to
the heart muscle supplied by that
artery/branch. Unless opened
within six hours of blockage, it
can lead to permanent damage to
that part of the heart muscle with
the result that the heart pumping
activity is permanently reduced.
The extent of damage caused depends on the site of blockage. If
a main artery gets blocked, the
damage will be larger than the
blockage in a smaller branch.
One third of the patients of heart
attack has sudden cardiac death
and are not able to seek medical help. In those patients who
are able to reach the hospital, the
doctors open the blood vessel either by a clot dissolving medicine
or mechanically by angioplasty.
In angioplasty, a fine tube is inserted from the artery of groin or
wrist and through this tube a balloon is passed across the blockage over a fine wire. The balloon
is inflated to open the artery and
then a stent is placed to keep this
artery open (Figure-2).
Blockages can also be removed
with clot dissolving medicines.
However in the first 12 hours of
heart attack, angioplasty is the
most viable and effective option.
21
ARTICLE
Eat a Heart-Healthy Diet
It is always better to eat a low
fat diet; limiting certain harmful fats are also important. Of
all the types of fat saturated,
polyunsaturated, monounsaturated and trans-fat saturated
fats and trans-fats are the ones
which should be avoided. One
should try to keep saturated fat to
no more than 10 percent of daily
calories and avoid trans-fats altogether. The major sources of
saturated fat and cholesterol include red meat, yellow portion of
egg, dairy products, coconut and
palm oils. Major sources of transfats include deep-fried fast foods,
bakery products, packaged snack
foods, margarine and crackers,
etc. If the nutrition label has the
term partially hydrogenated, it
indicates that the product contains trans-fats.
A diet rich in fruits, vegetables and
whole grains can help protect the
heart. Beans, other low-fat sources of protein and certain types of
fishes can also reduce the risk of
heart disease. Most people need
to add more fruits and vegetables
to their diet five to 10 servings
a day. Eating several servings a
week of certain fish, such as salmon and mackerel, may decrease
the risk of heart attack.
Those who have high blood pressure should take less of salt, particularly preserved foods which
are rich in salt content. If one is
overweight, the total calorie intake also needs to be restricted to
reduce the weight.
Regarding alcohol intake in
healthy adults, its better to do
so in moderation women of all
ages and men older than age 65
can have one drink a day; men
aged 65 and younger can have
two drinks a day. At the moderate
level, alcohol does not adversely
22
Fig.: 1
It is recommended that at
least 30 to 60 minutes of
moderately intense physical activity most days of the
week is good for the heart.
However, even shorter
amounts of exercise could
offer heart benefits. One
can even get the same
health benefit if the workout time is broken up into
three 10-minute sessions
most days of the week. One
doesnt have to exercise
strenuously to achieve
benefits. One can see bigger benefits by increasing
the intensity, duration and
frequency of the workouts.
ARTICLE
are associated with higher blood
fats, higher blood pressure, and
an increased risk of heart disease
and stroke.
Fig.: 2
Diabetes is an important risk factor for heart disease. Proper control of diabetes not only reduces
the chances of heart attacks, but
also lessens the damage to other
organs of the body, like kidneys,
brain and eyes.
Controlling Blood Cholesterol
Levels
High levels of blood cholesterol
are associated with increased risk
of heart disease. Blood cholesterol
levels, therefore, should be maintained within the normal range,
particularly the LDL cholesterol
levels (also known as bad cholesterol levels). Higher HDL cholesterol (good cholesterol level) level
is good for the heart. A healthy
lifestyle, proper care of diet and
doing physical activity helps to
reduce the LDL cholesterol levels
and increase the HDL cholesterol
levels. If changes in ones lifestyle
are unable to control ones cholesterol levels, one may have to take
medications to control the cholesterol levels.
Enough Quality Sleep
Sleep deprivation can have harmful effects on health. People who
dont get enough sleep have a
higher risk of obesity, high blood
Regular Health
Screenings
23
r
Atul
Chatuvedi,
Chairman, PESB in his
address said that enhancing knowledge base, clarity
of thoughts and ability to take
(L to R) Mr. C. S. Verma, Chairman, SCOPE, Dr. U. D. Choubey, DG, SCOPE, Mr. A. K. Pavadia, Joint Secretary, DPE, Mr. Pratyush Sinha,
former CVC addressing the participants.
24
SCOPE News
to change the ways of doing business order to keep pace with the
changing times. Strong leadership at the top, investment in
innovation and R&D, sustained
relations with the community,
concern for environment and
transparency are the need of the
hour, he added
Dr. U.D. Choubey, DG, SCOPE,
said that there is need to focus
on leadership development in
CPSEs. While outlining the differentiating between leader and
leadership, Dr Choubey said that
a leader focuses on personal attributes whereas leadership is a system process. He said the concept
of leadership cannot be transported outright from Western
management.
But needs to
be adapted to
Indian culture
and context. He
also emphasized
the need to have
sustained relationship
with
the community
at large.
25
SCOPE News
Mr. C. S. Verma, Chairman, SCOPE (2nd from left) releasing the Special Issue of Kaleidoscope Journal on Image Management
in CPSEs. Standing on his right is Dr. U. D. Choubey, DG, SCOPE and on his left are Mr. Ashok Venkatramani, CEO, MCCS Pvt.
Ltd. (an ABP Group Company) and Dr. Jaishri Jethwaney, Programme Director.
Crises are part and parcel of Corporate life. During crises, communication takes centre
stage. While good management and transparent handling of crises can lesser the physical
harm, effective communication can mitigate damage.
SCOPE organized a two-day workshop on Changing Paradigms in Crisis Communication
and Media Management on 20th-21st August 2014 at SCOPE Convention Centre with a view
to acquaint the Corporate Communication Executives and other executives, posted in strategic
positions, with all the aspects of natural and man-made crisis, foreseeing crisis, advance planning,
role and imperatives of communication in various phases of crisis and providing hands-on-skill
in media management. Mr. C.S. Verma, Chairman, SCOPE & Chairman, SAIL, inaugurated the
workshop and released the special edition of SCOPEs monthly journal KALEIDOSCOPE on
Image Management in CPSEs. Other eminent speakers in the inaugural session included Dr. U.D.
Choubey, Director General, SCOPE, Mr. Ashok Venkatramani, CEO, MCCS Pvt. Ltd (an ABP Group
Company), Dr. Jaishri Jethwaney, Professor (PR & Advertising), IIMC, and Programme Director
and, Mr. R.K. Singhal, GM (Corporate Affairs Division), SAIL.
The inaugural session was followed by six technical sessions which were addressed by some of
the most happening speakers who provided varying perspectives on the subject and related
issues. In the valedictory session, Mr. Sanjeev Srivastava, Group Editor-In-Chief, Focus News
Network, delivered the valedictory address. Dr. U.D. Choubey, DG, SCOPE, gave special address
while Dr. Jaishri Jethwaney summed up the proceedings. Mr. R.K. Singhal, GM (Corporate Affairs
Division), SAIL, welcomed the dignitaries and participants while Mr. K.N. Dhawan, Advisor
(CC), SCOPE, proposed a vote of thanks. The workshop was attended by a large number of PR
& Corporate Communication practitioners and other executives posted in strategic positions in
various PSEs.
26
SCOPE News
(L to R) Mr. C. S. Verma, Chairma, SCOPE, Dr. U. D. Choubey, DG, SCOPE and Mr. Ashok
Venkatramani, CEO, MCCS Pvt. Ltd. addressing the Workshop.
person,
Dr.
Jaishri
27
SCOPE News
crisis and other crises cases from
the communications perspective
and why a few strategies employed by the players went
against them.
Mr. S. S. Mohanty, Director
(Technical), SAIL, presented case
studies of disruption of plant
operations at Bhilai Steel Plant
in June 2014 and Bokaro Steel
Limited in August 2010. During
the last session on the day 1 on
levarging Employee confidence
and trust in a Crises Situations.
Mr. Sugata Hazara, Senior
Advisor, Public Affairs, DTA,
and Mr. Rahul Dhawan, Head,
Strategy & Planning, DTA, provided many tips on crisis management. It was shared that many
companies, like Coca Cola, dont
use the term crisis as it had negative connotations. Instead they
called it Incident Management.
In a crisis situation, the rulebook,
he said often fails, what come to
rescue are human integrity and
improvisation skills. The four
Cs of incident management,
according to them, included
Control, Concern, Caution
and Containment.
Day-2 began with screening of
films on various crisis situations
followed by analysis and a Q&A
session. The session was anchored by Dr. Jethwaney.
Session IV on disaster management the importance of thinking on your feet was anchored by
Mr. Subhamoy Bhattacharjee, Dy.
Editor, Indian Express, and Mr.
G.S. Bawa, GM (PR), AAI. Mr.
Bawa emphasized on the need for
preparation/ doing ones homework and developing sharp reflexes. He shared the importance
of BMW, an acronym for Brain,
Mouth & Words and mentioned
28
Mr. Sanjeev Srivastava, Group Editor-In-Chief, Focus News Network (centre) delivering the Valedictory Address. Sitting on his right is Dr. U. D. Choubey, DG, SCOPE and
on his left Dr. Jaishri Jethwaney, Programme Director.
SCOPE News
(L to R) Mr. H. L. Choudhary, CMD, NPCC, Mr. S. S. Mohanty, Director (Tech.), SAIL, Mr. Prithvi Haldea, CMD, Prime Database, Mr.
Gaurav Choudhary, Economy Editor, Hindustan Times and Mr. Subhmoy Bhattacharjee, Dy. Editor, Indian Express addressing the
Workshop.
has had the distinction of working for years in print and electronic media including his over
15 years stint at the BBC and
many mainstream news channels
and newspapers.
DG, SCOPE reiterated that he
would soon have a dialogue with
the chief executives of CPSEs
on the need for creating a taskforce on corporate strategy and
communication.
Mr. Srivastava advised on the
need for being factual and honest
in a crisis. He said that his years
of experience in the print and
electronic media both Indian
and foreign has made him to
believe that reality with warts
and inadequacies was far better than concoctions, half truths
and being evasive. Media people
know about crisis than anyone
else even within their own media organizations so they tend
to believe and appreciate honest
sharing of facts, he advised.
In her summation Dr. Jaishri
presented some key learning
from across various sessions. She
praised the delegates for their
excellent participation. Mr. R.K.
Singhal welcomed the participants, while Mr. K.N. Dhawan
proposed vote of thanks. The twoday workshop hopefully achieved
its objectives in full measures, if
the response of the participants
could be an indication.
- K.N. Dhawan
29
SCOPE News
r. C. S. Verma,
Chairman, SCOPE
&
Chairman,
SAIL and Dr. U.D. Choubey,
Director General, SCOPE
were invited by India Today
Group in a panel discussion
titled The Business of Public
Enterprise: The Winning
Formula during the PSU
Awards function held on
August 21, 2014 in New Delhi.
The third Panelist was Mr. B.C.
Tripathi, CMD, GAIL India
Ltd. Mr. Ram Vilas Paswan,
Union Minister of Consumer
Affairs, Food & Public
Distribution Distributed the
awards to PSEs.
Mr. C. S. Verma, Chairman,
SCOPE emphasized on measures for greater autonomy and
efficiency of CPSEs through
further reforms aimed at separating the management from
the ownership in these organizations. This was the need of
the hour, keeping in view the
Mr. C. S. Verma, Chairman, SAIL and Chairman, SCOPE, received Awards for being the Best in CSR and Sustainability as well as the most Eco-friendly PSU
from Mr. Ram Vilas Paswan, Union Minister of Consumer Affairs, Food & Public
Distribution.
Dr. U. D. Choubey, DG, SCOPE (2nd from left) addressing the India Today PSUs
Awards Function. Also seen in the picture are Mr. C. S. Verma, Chairman, SCOPE
and Chairman SAIL (extreme right), and Mr. B. C. Tripathi, CMD, GAIL India Ltd.
(3rd from left).
30
SCOPE News
exchequer has been steadily increasing over the years and the
estimated revenue from Service
Tax for the fiscal 2014-15 is more
than Rs. 2,15,000 crores. Its share
in the GDP is more than that of
agricultural and industrial sectors, he added.
Dr. Choubey further mentioned
that CPSEs are facing problems
because of total taxation. He said
that on the one side there is VAT
on commodities but on the other
side Service Tax is levied on their
transportation and other services
that also include the commodity. He implied that the unified
GST would help them come out
of such paradoxical taxation regime, which has currently been
prevailing.
Dr. Choubey also urged that not
only specific infrastructure projects but also all the infrastructure
31
SCOPE News
Dr. U. D. Choubey, DG, SCOPE addressing the elts PSU Summit 2014.
between academicians, researchers, professional and government and people at large. This
would help in improving corporate governance practices and
Press Club of India (IPPCI). IPPCI also organized a seminar on Changing Trends of Public Relations which was
addressed by Mr. K.N. Dhawan, Adviser (CC), SCOPE.
Mr. K. N. Dhawan, Adviser (CC) and Mr. A. S. Khan, Manager
(CC), SCOPE (Special Invitees) felicitating Mr. Manoj Tiwari, MP
durign the Award Function.
32
SCOPE News
SCOPE Family deeply mourns the sad demise of its first Chairman Shri Mohd. Fazal,
aged 93, who passed away on 5 September 2014 at his residence in Abu Bakarpur in
Allahabad. Paying tribute to Shri Fazal during the condolence meeting held in SCOPE, Dr
U.D. Choubey, Director General, SCOPE, said that Shri Fazal was a great visionary whose
contribution to the cause of Public Sector has been exemplary.
Born on July 2, 1922, Shri Fazal was associated with SCOPE since its formative years. He
was the Founding Member of the society New Horizon which, later in the year 1973, was
converted into Standing Conference of Public Enterprises (SCOPE). Under his leadership,
SCOPE gradually increased its activities to play a useful role for the growth of public
sector. Shri Fazal studied at the Allahabad University and later at the London School of
Economics. He served in Government of India in various capacities. He was appointed Secretary of the Industrial Development Department and was later the senior-most
Member of the Planning Commission 1980-85. He served in the Planning Commission as
its senior-most member from April 1980 till January 1985. He was also the Chairman and
Managing Director of EPI and the Founding Chairperson of Hughes & Hughes Chem Ltd.
In 1999, he was appointed the Governor of Goa and later the Governor of Maharashtra.
SCOPE, the Public Sector Fraternity and KALEIDOSCOPE remember his contribution for
the growth of Public Sector.
33
SCOPE News
Dr. U. D. Choubey, DG, SCOPE (centre), Mr. R. P. Tak, CMD, CCI (left) and Mr. Rajkumar
S. Adukia, Chairman Ind AS Committee (IFRS), ICAI in the opening session of the
SCOPE Programme on Companies Act & IFRS.
SCOPE News
governance, deliverability and image building.
He said that adopting
IFRS would enable them
to compete with multinationals throughout the
world.
Mr. R. P. Tak, CMD,
Cement
Corporation
of India, and Member,
SCOPE Executive Board,
in his address said that
the adoption of IFRS
would enormously benefit the commercial organizations, investors and
the regulatory bodies.
committee (IFRS) of
the ICAI, and Program
Director, gave the programme
perspective.
The other distinguished
faculty constituted of
CA Mohan R. Lavi, CA
Yagnesh M. Desai CA
Arpit Mundra and CA
Anand J. Banka. Nearly
70 participants from
member PSUs attended
the programme. Mrs.
Shashi Bala Mathur &
CA Prachi Jain were the
Program Coordinators
from SCOPE and the
Institute, respectively.
35
Auditorium
The chamber having capacity of 92 persons (86
Nos. Chairs + 6 Nos. Chairs on Dias) equipped with
mikes on dias, tables & podium.
Bhabha Chamber
Fazal Chamber
Tagore Chamber
Business Centre
Annexe II
Tansen Chamber at UB
Banquet Hall
Annexe I
37
Convention Hall
Meeting Hall
A large sized Convention hall having sitting capacity of 300 delegates. Various seminars, training programmes, presentations, get to gather etc. are conducted in Convention Hall. It provides ambient and
peaceful environment for the programmes.
Meeting hall having U shaped table, with a meeting capacity of 65 delegates.Most widely used for
small size meetings and training programmes,
group discussion, power point presentations etc.
Banquet Hall
VIP Lounge
A new beautiful Banquet Hall with latest specification of engineering has been created in SCOPE
Minar. It has attached huge kitchen and washrooms
facility. Around 300 persons can dine in the banquet
hall including sitting of 50 persons.
There is a wide space for vehicle parking that cater for a capacity of 700 cars, including the newly built good quality Banquet Hall
wherein 300 delegates can comfortably dine at a time, makes it special to deliver an all-round conducive meeting environment .
38
Book Review
Dr. B. B. Goel,
Fundamental values for humanity are the bedrock of any civilized society. Originating from
the mind and aspirations, these
affect attitudes, preferences and
intelligence. Values are first personal, then familial and culminate into societal values. Besides,
all religions propound values for
moral regeneration of mankind.
39
SCOPE News
has shown no inclination to bring
reforms can be accepted only
partially. Democracy has matured while power and energy
of human capital and I.T. have
been the driving forces for success. However, the country has
to rise to its full potential and
make a dent on problems of poverty, employment, illiteracy and
productivity.
The aggressive tone is again
visible on the current state of
economy forgetting that India
was among the few countries to
withstand global bubble (2008).
Notwithstanding that quality of
life is still to bloom, wrong economic policies and governance
failure is a cause for concern.
Inability of anti-poverty programs for skill upgradation, capital intensification at the expense
of creating employment, inadequate infrastructure, worsening
trade deficit, etc. need prompt
attention.
Mathur justifiably argues that
we blindly adopt western models for solving ills. This results
in looming ecological disaster,
economic inequality and relentless consumerism. Faced with
GDPs fallacy that it neither measures sustainability of growth
nor quality of life. While UNDP
developed HDI, World Watch
Institute has recently devised the
Genuine Progress Indicator (GPI)
across the economic, ecological
and social domain to measure
sustainable development. This
matrix deserves befitting trial.
Explaining the Gandhian ideology (based on ethics and individual welfare), Trusteeship envisages an individual to look after
not only his interest but also the
interests of others. Following the
footprints of Buddha, a Middle
40
SCOPE News
Document, monitored by an independent Task Force, is rated
by international observers as the
best in the world.
A brilliant exposure on ethical
framework is portrayed Kant
echoing Gita do your duties for
the sake of duty and Utilitarians
expounding greatest good of
greatest number. History testifies that ideals bestowed under the Preamble to Indian
Constitution are achievable if
public office holders have strong
ethical moorings. Further, in the
wake of adherence to NPM, public servants have to behave ethically in maintaining peoples trust
UK Civil Service Code enjoins
civil servants to follow pride,
passion, pace and professionalism in practical life. The Office
of Government Ethics (USA) has
devised 14 principles (employees not to use public office for
private gain and act impartially).
Australia is a repository of adhering to fundamental values more
than legislation.
In India, various Committees/
2nd ARC have reiterated for upholding the highest standards of
ethical conduct (integrity, impartiality, commitment, accountability, exemplary behavior). But, as
usual, the Conduct rules provide
escape routes for unscrupulous.
It requires well-structured institutional support and ethics infrastructure for inspiring public
servants to realize vision and purpose in carrying out their duties.
Besides, the author beautifully
suggests changes in work culture
by reminding Gita: one should
perform duties diligently and piously, without expecting results.
The last part on combating corruption and leadership is lively.
Corruption, an abuse of entrusted power for private gain,
41
42
r.
Narendra
Singh
Tomar, Union Minister of Mines, Steel,
Labour and Employment and Mr.
Vishnu Deo Sai, Union Minister
of State for Mines, Steel, Labour
and Employment, visited RDCIS
Ranchi on 23rd August, 2014 to
review the status of R&D and lay
thrust on proprietary research
in the organization. The Honble
Minister addressed a large gathering of RDCIS collective and
conveyed to them the thrust of
government on research. The
visiting dignitaries were accompanied by Mr. C. S. Verma,
Chairman, SAIL, and Mr. S. S.
Mohanty, Director Technical.
Mr. Tomar inaugurated a Heat
Hardening Pelletisation Unit at
SAIL Research & Development
Centre for Iron & Steel (RDCIS),
Ranchi. This unit shall facilitate
in resolving the problems being
faced by Indian steel industry for
beneficiation of iron ore. SAIL can
now develop relevant technology
Mr. Narendra Singh Tomar, Union Minister of Mines, Steel, Labour & Employment
(centre), Mr. Vishnu Deo Sai, MoS for Mines, Steel, Labour & Employment (on right)
and Mr. C. S. Verma, Chairman, SAIL at RDCIS, Ranchi.
r. C. S. Verma, Chairman,
SAIL, was unanimously elected as the first President of the
Indian Steel Association.
He thanked the members for reposing
confidence in him and electing him as
the first President of the Indian Steel
Association and mentioned that he
looked forward to working along with
(From left to right) Mr. C.S.
the other members so that the Indian
Verma, Mr G. Mohan Kumar,
Dr. Edwin Basson and Mr. steel industry plays a catalyst role in the
economic growth of the country.
Sajjan Jindal.
43
44
PSEs Celebrate
68th Independence Day
Independence Day Celebrations at MCL,
Burla and Sambalpur
Mazagon
Dock
Limited
(MDL) celebrated the 68th
Independence
Day
with
45
46
2
Mr. Narendra Kothari, CMD, NMDC Limited, addressing
the employees in the presence of Mr. N. K. Nanda, Director
(Technical), Mr. S. Thiagarajan, Director (Finance), Mr. S. Bose,
Director (Production), Mr. S. K. Das, Director (Commercial), Mr.
Rabindra Singh, Director (Personnel), employees and their
family members.
47
48
the
dignitaries
who
participated
in
Mr. B. Surender Mohan, CMD, NLC Ltd, inspecting the ceremonial parade at the 68th Independence Day celebrations at
Neyveli.
49
50
Mr. K. L. Dhingra, CMD, ITI, salutes the National Flag after unfurling it amidst the singing of the National Anthem
51
52
Indian
Renewable
Energy
Development Agency (IREDA)
has signed the agreement with
Japan International Cooperation
Agency (JICA) for availing the
Line of Credit of JPY 30 billion
from JICA. The agreement was
signed by Mr. K. S. Popli, CMD,
IREDA, and Mr. Shinya Ejima,
Chief Representative, JICA, in
New Delhi recently in the presence of senior officials of JICA,
MNRE and IREDA. Under the
agreement, IREDA shall utilize
the funds for financing renewable energy based power projects
in India. The line of credit from
JICA shall enable IREDA to provide funding to a large number of
renewable energy projects across
the country at competitive terms
including the longer tenure of
loan which shall also support in
the overall endeavor towards a
low carbon economy. The company has cumulatively disbursed
an amount of Rs.14,319.76 cr uptill March 2014. IREDA has been
raising resources from various
53
54
Mr. Malay Chatterjee, CMD, KIOCL addressing the 38th AGM of the company.
55
56
BHEL Develops Fuel Flexible Supercritical Boilers a Major Step towards Managing the Uncertainties Regarding Coal
Mr. Rajeev Sharma, CMD, REC inaugurating the Maitry Ghar - a Widows Ashram in
Vrindavan.
widows who will live a life of respect and dignity. The ashram will
provide them essentials for life
including daily midday meals,
fruits, nutritional supplements,
clothing and healthcare. Maitri
Ghar will also serve as an Ageing
Resource Centre for research in
ageing as well as be a training
57
NMDC Advt
58
Engineers
India Pays
Final Dividend to
Govt. of India
NS Kamorta, the first of the four anti-submarine stealth corvettes, fitted with state-of-the-art equipment from Bharat
Electronics Ltd. (BEL) and built indigenously for the Indian
Navy by Garden Reach Shipbuilders & Engineers Ltd. (GRSE), was
commissioned by Mr. Arun Jaitley, Raksha Mantri, in Visakhaptnam
recently. Admiral R.K. Dhowan, Chief of Naval Staff, Vice Admiral
Satish Soni, Flag Officer Commending in Chief, East and Vice
Admiral A.V. Subhedar, Controller of Warship Production and
Acquisition, and other senior officers of BEL and GRSE were present at the occasion.
BEL has contributed to the indigenous construction of INS
Komarta by providing most of the major sensors and electronic
systems, including 3-D Surveillance Radar (Revathi), Active-cumPassive Integrated Sonar System (Humsa-NG), EW System Sanket,
Combat Management System, Fire Control System (Lynx), Ship
Data Network, Composite Communication System (CCS Mk III)
and Data Link (Link II). INS Kamorta is a significant step towards
Indias pursuit for self-reliance in indigenous warship building.
APCOS
has
been
ranked as the Best
performing PSU-
59
60
Mr. Arun Jailtely, Raksha Mantri (extreme right), inaugurating the Mazdock
Modernization Project by unveiling the plaque. RAdm R.K. Shrawat, CMD, MDL and
Admiral R. K. Dhowan, Chief of the Naval Staff, standing on the right of the Minister.
The submarine construction facilities at MDL have been modernised and augmented to world
class standards. With its highly
skilled and trained manpower,
MDL is now poised to build the
next generation submarines for
the Indian Navy.
During his visit to MDL, the
Defence Minister also inaugurated the Mazdock Modernization
PERSONALIA
Mr. N. K. Verma
takes over as MD of
ONGC Videsh Ltd.
Mr. P. C. Panigrahi
Director (Pers.) MCL
elected Regional
Vice-President
NIPM.
Mr. R. G. Rao
takes over as
Director (Finance),
Instrumentation Ltd.
61
62
Growth Plans
r. G. P. Kundargi, CMD,
MOIL, called on Mr.
Narendra Singh Tomar,
Union Minister for Steel, Mines,
Labour and Employment in New
Delhi recently. During the meeting CMD appraised the Minister
about MOIL, its future growth
plans and the technical capabilities and the vast experience
gained by the Company over the
last several decades in manganese mining and value addition
based on manganese ore.
He further informed that in order
to meet the growing demand for
manganese ore by steel industry,
MOIL has undertaken a number
of mining projects in its mines
which will not only help to sustain the existing production level
but also augment the same in
the coming years. In addition,
developmental work is also
under progress in respect of
the new areas in Nagpur and
Bhandara districts which will
help to expand the existing mines
as well as opening up of at leas t 4
new mines.
Mr. G. P. Kundargi, CMD, MOIL, welcomming Mr. Narendra Singh Tomer, Union
Minister for Steel, Mines Labour and Employment, New Delhi.
Performance Excellence
Award 2013 to CMD, MOIL
r. G. P. Kundargi,
CMD,
MOIL has been awarded
PERFORMANCE EXCELLENCE
AWARD 2013 (INDIVIDUAL) by Indian
Institution of Industrial Engineering
(IIIE). The award has been conferred
based on the outstanding contribution made by him in leading the organization towards excellence.
The award was presented to Mr.
Kundargi by Padmabhushan Dr. A
Sivathanu Pillai, a Distinguished
63
64
HEC Supplied
Crane -
H
Mr. A. N. Sahay, CMD & Mr. J. P. Singh, Director Technical (Proj. & Plng.), MCL with
Women Hockey Players.
ahanadi
Coalfields
Limited (MCL), a subsidiary of Coal India
Limited, awarded one lakh rupees each to the women hockey
players of Odisha who brought
bronze medal for India in the
Junior Women Hockey World
Cup-2013 held at Germany.
Ms Nomita Toppo, Ms Nilima
he
State
Government
of Manipur has signed
the Pre Implementation
Agreements (PIA) towards allotment of four Hydro Electric
Projects (HEP) namely, 51 MW
Tuivai, 60 MW Irang, 67 MW
Khongnem Chakha and 190
MW Pabaram HEPs to the
North Eastern Electric Power
Corporation Ltd. (NEEPCO) for
detailed investigation and subsequent execution. The signing in
ceremony was held at Imphal in a
65
66
67
Mr. A.K. Jha, Director (Technical), NTPC, receives the award for
Best HR Practices from Mr. Ram Vilas Paswan, Union Minister
for Consumer Affairs, Food and Public Distribution.
68
Mr. Vinod Behari, Executive Director (HR & CC), REC, collects
the award for Best HR Practices from Chief Guest Shri Ram
Vilas Paswan, Union Minister for Consumer Affairs, Food and
Public Distribution
For the past half century NLC was operating lignitebased Thermal Power Station. Now it is installing
coal-based thermal power stations apart from Nonconventional energy technology including wind
and solar power.
Mr. B. Surender Mohan, CMD, NLC, delivered the
keynote address. Mr. S. Rajagopal, Director (Power),
and Mr. N. Illamparuthi, ED (SME & Conveyors),
NLC, also participated in the summit.
69
Mr. Rajeev sharma, CMD, REC receiving the ICSI National Award
from Mr. Arun Jaitely, Minister for Finance, CA and Defence.
70
Employment, Mr. Narendra Singh Tomar as dividend for the financial year 2013-14, during his visit
to KIOCL Corporate Office in Bangalore.
During the financial year 2013-14, KIOCL reported 35 percent jump in its operational performance with production and dispatch of 1.710 MT
and 1.615 MT of Pellets respectively. Companys
financial performance improved with growth of
32 percent in Gross Income at Rs. 1532.37 crs and
PBT of Rs. 61.40 crs vis--vis Rs.32.34 crs, PAT of
Rs. 39.94 crs vis--vis Rs.31.05 crs thereby recording a growth of 29 percent over the year 2012-13.
he
Central Warehousing
Corporation (CWC) achie-ved
yet another record turnover
of Rs.1528.19 cr during 2013-14
as against Rs. 1406.70 cr earned
during 2012-13, thus recording a
growth of 8.64 percent. The Profit
Before Tax (PBT) and Profit After Tax
(PAT) also increased by 22.58 percent and 15.41 percent respectively
over the preceding year. Keeping in
view the national priority for safe
storage of foodgrains, utilization of
capacity for storage of foodgrains
was given due priority. CWC handled 10.36 lakh TEUs during 201314 despite slump in the IMPEX
trade. During 2013-14 CWC continued to operate Cargo Terminal of
Integrated Check Post (ICP) at Attari
on Indo-Pak border entrusted to
CWC by the Department of Border
Management, Ministry of Home
Affairs. CWC handled 85,484 export/
import trucks as against 74,847 export/import trucks handled during
2012-13 and earned a gross revenue of Rs. 39.28 Cr. during 2013-14
93
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