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These Oil, Aviation & Defence PSUs are worst in Corporate Governance

Non compliance of corporate governance directives by certain PSUs led to a loss of Rs 9,417.75 crore to the exchequer in 2017-18, according to a CAG report tabled in the recently concluded winter session in Parliament
New Delhi: It is often said that the key elements for the pink health of business are responsibility and accountability. Mervyn King, the chairman of the King report had mentioned corporate governance as one of the key factors that ensure accountability. “It is clear that good corporate governance makes good sense. The name of the game for a company in the 21st Century will be to conform while it performs" he had said. Now if we talk about corporate governance in PSUs, it emerges as a great matter of concern. In fact, paying heed to the standards of corporate governance is generally found very low in the priorities of public companies. A recent example is the  CAG report that was tabled in the recently concluded winter session of the Parliament. The report suggests that non-compliance of corporate governance directives by certain PSUs led to a loss of Rs 9,417.75 crore to the exchequer in 2017-18. Here the case was that all profit-making PSUs are required to declare a minimum dividend on equity of 20 percent or a minimum dividend payout of 20 per cent of after-tax profit, whichever is higher, subject to availability of disposable profits. As per the norms, however, in the case of PSUs the majority shareholder which is government, could seek higher dividend from the PSUs with large disposable profits or healthy cash reserves. At the same time, a higher or special dividend may also be considered.
“It is clear that good corporate governance makes good sense. The name of the game for a company in the 21st Century will be to conform while it performs" Mervyn King, Chairman, King report
Figures suggest that certain PSUs did not adhere to the prescribed norms. That is the [art of another report which we will tell you in detail later. The point here is to conform while you perform. While digging about corporate governance in PSUs we have found a certain number of PSUs that find their names in the list of Poor or Very Poor. The list is maintained by the Ministry of heavy industries and public enterprises. The recent list of worst performer PSUs in the corporate governance is of 2018-19. There are aviation companies in the list, one is a subsidiary of Airports Authority of India and the other of Air India. Even PSUs from Oil & Gas, Defence and Pharma sectors have made it to the list.
"Corporate governance in PSUs has always been a matter of concern. So much so that a CAG report tabled in the recently concluded winter session of the Parliament suggests that non-compliance of corporate governance directives by certain PSUs led to a loss of Rs 9,417.75 crore to the exchequer in 2017-18"
The list has been categorised into various categories including Poor ( Report Not Received), Poor, Fair, Good, Very Good, Excellent, Exempted (No Business Operations), Under construction, Exempted (Under Closure). Here report not received category is for the PSUs that didn't even bother to send the report on compliance of corporate governance to the ministry. Here is the list of worst performing PSUs in Corporate Governance compliance:
  1. INDIAN MEDICINES & PHARMACEUTICAL CORPN. LTD.
  2. HINDUSTAN ANTIBIOTICS LTD.
  3. IDPL (TAMILNADU) LTD.
  4. INDIAN DRUGS & PHARMACEUTICALS LTD.
  5. ORISSA DRUGS & CHEMICALS LTD.
  6. RAJASTHAN DRUGS & PHARMACEUTICALS LTD.
  7. AAI CARGO LOGISTICS & ALLIED SERVICES COMPANY LTD.
  8. AIR INDIA ENGINEERING SERVICES LTD.
  9. TAMIL NADU TRADE PROMOTION ORGANISATION
  10. JAMMU & KASHMIR DEVELOPMENT FINANCE CORPORATION LTD
  11. BHARAT SANCHAR NIGAM LTD.
  12. MILLENNIUM TELECOM LTD.
  13. BEL OPTRONICS DEVICES LTD.
  14. BEL-THALES SYSTEMS LTD.
  15. NAINI AEROSPACE LTD.
  16. NORTH-EASTERN REGIONAL AGRI. MARKETING CORP.LTD.
  17. NATIONAL MINORITIES DEVP. & FINANCE CORPORATION
  18. PETRONET CCK LTD.
  19. NATIONAL HIGHWAYS & INFRASTRUCTURE DEVELOPMENT CORPN. LTD. (POOR)
  20. THE BISRA STONE LIME COMPANY LTD. (Poor)
  21. COTTON CORPN. OF INDIA LTD.
  22. HANDICRAFTS & HANDLOOM EXPORTS CORP. OF INDIA LTD.
Like it is said “it is not simply a case of having a set of procedures and processes, nor is it just about having controls in place. Reliance on a poor control is often worse than having no control at all".