people politics policy performance

Event Report

Honouring the PSU outliers...

PSU top officials after receiving awards from union ministers and Babul Supriyo as well as cinestar Jeetendra Kapoor at the fourth Governance Now PSU Award ceremony in Delhi

Can’t imagine future without PSU, technology are pivotal to PSUs, says Ram Vilas Paswan ’s growth story: Experts

GN Bureau

he public sector today plays a big role Tin the economy and it is in “direct competition with the private sector”, said Ram Vilas Paswan, union minister of consumer affairs, food and public dis- tribution, at the fourth Governance Now PSU Awards ceremony on December 23. Giving an example, he said we can- not imagine the private sector selling wheat at `2 a kg and rice at `3 a kg. “We cannot imagine the future with- out PSUs,” he added. On demonetisation, the union min- difficulties. It is a temporary phase.” ister said, “We know that the country He spoke of the need for transpar- echnology can play a crucial role lacks infrastructure to support cashless ency in governance and said that de- Tin helping PSUs perform better and transactions, we accept it. But to achieve monetisation will “end corruption and strengthen India. That was the conclu- something, we have to go through bring transparency”. n sion of a panel discussion featuring

52 GovernanceNow | January 1-15, 2017 photos: arun kumar PSUs a tool for GDP depends development: on PSUs: Vinit Babul Supriyo Goenka

SUs are a great tool for economic de- Pvelopment and they should do well e need to build a strong country and make profits, said Babul Supriyo, Wthrough a strong PSU communi- minister of state, heavy industries and ty, said Vinit Goenka, member, IT task- public enterprises. “In a room full of force, ministry of shipping, road trans- people who are working in PSUs, I don’t port and highways. PSU top officials after receiving awards from union ministers Ram Vilas Paswan and Babul Supriyo as well as cinestar Jeetendra Kapoor at the fourth Governance Now PSU Award ceremony in Delhi need to tell you what a PSU is.” n He said, “Even with privatisation, there is fantastic growth in the PSU sec- tor.” He added that in 1951, there were only five PSUs; now there are 298, alto- the potential of PSUs’ by saying that gether worth `10,000 crore. “PSUs have PSU, technology are pivotal to when industrialisation was taking had a major role in the socioeconomic place, it was PSUs that contributed a development of the country and the India’s growth story: Experts lot to the making of India. entire GDP depends on it,” he added. Sanjeev Gupta, general manager, Describing the business setup of the Microsoft India, said that about four country, he said that with a population years ago, prime minister Narendra of 125 crore people, and with the open- Modi had said that IT is equal to IT. ing up of the economy, India has thou- “What he meant was that India today is sands of aspiring entrepreneurs. All equal to India tomorrow. PSUs, in that of them want to set up their own busi- respect, are a very strong pillar for the nesses, but don’t have basic funding. growth of India.” He said, “The PMA factor (prefer- Jai Mrug, founder of M76 Analyt- ential market access) has not been dis- ics, talked about the new data science cussed in detail. There are thousands of analytics and how it can be used by of MSMEs and fantastic startups and the public sector and the masses. Mrug innovation groups in the country, but said that governments today across the who will fund them? Do we want ev- globe are using a lot of analytics. eryone to be an employee? It is our re- Harbhajan Singh, former director sponsibility that we make use of CSR general, National Productivity Coun- (corporate social responsibility) to cil, said that PSUs are the backbone for fund their innovation and with PMA, four policy experts. creating infrastructure in the country. secure their businesses.” Parul Soni, global managing part- “Our core industry needs a technologi- He highlighted the need to build a ner, Thinkthrough Consulting (TTC), cal base. It is very important to provide strong country with a strong commu- started off the discussion on ‘Unlocking leadership for that industry.” nity of public sector undertakings.

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ashish asthana

Indian PSUs: Is a metamorphosis possible? As PSU awards come to a close, a look at what made some stand out against the rest

Jai Mrug proudly claimed IT minister Ravi Shan- growth not being encouraging. kar Prasad, while addressing a ‘Vikas PSUs over a period have evoked only Parv’ function organised to mark the extreme reactions. These range from completion of two years of the Modi global scale giants to tardy and wasteful government. entities that look anachronistic today. Air India reported a profit of `105 While numerous thought-provoking crore in the last financial. Air India Ex- discussions have taken place includ- press, the low-cost international opera- ing the usual stories of privatisation of SNL was incurring tions subsidiary of Air India, also re- PSUs, the word ‘unlocking the potential `8,000 crore loss in 2014. ported a profit of `362 crore in 2015-16 of PSUs’ will be best understood only But today it has earned for the first time since 2005. The Indian when we accept and ensure that the an operating profit of Railways, however, continued on a los- rationale for their existence and their `672 crore in just one ing streak with the dynamic passenger core goal is cast in stone and every oth- B and half years’ time,” prices falling, as well as freight revenue er thought revolves around it.

54 GovernanceNow | January 1-15, 2017 PSUs are more than business enti- ties, though they seek to be run like one, PSUs benchmarked against their industry peers at least in the financial perspective. Of- ten, their core objective includes look- Maharatna Maharatna growth Industry benchmark ing beyond immediate and short-term growth profitability and includes areas where Bharat Heavy Electricals Ltd 1.603380073 2 national control and pride are associ- ated. They are meant to be the driver Coal India Ltd 2.001216012 2 of change across the country, besides a channel to deliver the benefits envis- GAIL (India) Ltd 1.268173891 2 aged by the government for its people. At the outset, PSUs are sought to be Indian Oil Corp Ltd 1.071254831 2 created where capital investments are huge and products and services are to NTPC Ltd 1.276881773 2 reach across the geography and demo- graphics and ensure basic essential Oil & Natural Gas Corp Ltd 1.211283838 2 services like food, water, electricity, healthcare, education, communication, Steel Authority Of India Ltd 0.465878024 2 transportation and banking. However, in the long run, they need to build sustainability for themselves is the asset utilisation, which is a com- score for the overall Maharatna. Best as well as ensure that they do not lag bination of PAT/assets and total income/ performance, in which ONGC tops the behind in technology adoption, hu- assets. Both of them would be under charts. This is largely because ONGC man resources management and other pressure if an increasing number of pri- tops the charts in various non-finan- green initiatives that eventually posi- vate players come into play in different cial sections such as ICT, environmen- tion them for leadership in the future. parts of the value chain of coal mining. tal sustainability, HR and CSR. The financial and the non-financial In case the monopoly of Coal India That asset utilisation (an example metrics eventually provide an indica- is challenged, it could make way for of legacy) is one of the key drivers of tor of how well-equipped the PSU is in NTPC or ONGC, which perform well on the entire score is reflected in another the future to take care of its growth. other non-financials as well. ONGC, for contrasting metric, which is consistent example, performs well on a lot of oth- growth and adaptation, which when Could benefits of legacy er parameters that are softer in nature, benchmarked against industry as a finally be lost? such as ICT, environmental sustainabil- whole conveys the picture where PSUs The breakdown of old monopolies will ity, HR and CSR that ensure growth is could be lagging. lead to different pricing models and in- balanced as well as structured to take The scores on consistent growth and novative management of cost, some- on future challenges. This is seen in the adaption of various PSUs, when bench- thing that the PSUs need to manage the marked against industry average and burden of legacy. Some companies that normalised on a score of zero to two, have currently emerged as winners, The scores on consistent show a grim picture where all Maha- have an oligopolistic or monopolistic ratna’s are lagging behind their regular nature to their business, and are highly growth and adaption industry peers. asset-intensive. The relative monopoly of various PSU’s, when The Navratnas, while showing of Coal India thus earns it good finan- similar lagging trends in growth and cial metrics, but when it comes to an benchmarked against consistent adaptation, showed much overall metric, this monopolistic situa- industry average and better strategic performance and em- tion might change soon in the coming ployee productivity, which should year. In 2014, the government amended normalised on a score spark a debate on whether Navratnas the mining policy, and made necessary of zero to two, show a should be given a leg up to take more changes to allow private players into big ticket investment decisions. If, with the commercial sale of coal. This could grim picture, in which all a little leg-up in strategic investments, be the first precursor towards privatisa- Maharatnas are lagging the Navratnas could improve on asset tion of the coal mining industry. There- utilisation and employee productiv- fore, going forward from here, it may behind their regular ity, and strategic performance, then in not be possible always for Coal India to industry peers. the medium run they could almost ri- improve its performance. The primary val their private sector peers, as they driver of the performance of Coal India would then drive consistent growth as

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well. Overall, they seem to show much more agility than the Maharatnas. The growth of Maharatnas benchmarked against the industry Clearly, strategic investments hold the key to a runaway future of PSUs. Overall, as far as all the PSUs are concerned there are just 30% PSUs that have a score of above 100 for strate- gic investments. As far as maintaining growth is concerned only about 15% are near the industry benchmarks, while the rest are below.

Niche and innovation are the keys One of the new entrants to the list is Numaligarh Refinery. The refinery (of the Miniratna 1 category) tops in stra- tegic performance and asset utilisa- tion. It shows the way to many PSUs in terms of what they could achieve from innovating to market needs. Numaligarh Refinery recently added a slew of new products to its basket, The way forward and structural reforms can help them like special boiling point spirit (SBPS) Niche-based innovation, along with a being more effective and not just effi- and mineral turpentine oil (MTO). In focus on core strengths, can undo the cient. Given the fact that they have a strategic performance, it scores way burden of legacy for many PSUs. One larger mandate of developing not just beyond its peers, which is reflected of the popular theories for the exis- themselves but also their surrounding in its launch of new products to fit tence of PSUs has been that they should ecosystem, they also have to be mea- the market. It is the only refinery in be able to offer products at a price and sured by not just the value added per the northeast producing specialised quality that will often force the private person of their employee, but also the products that are used in paints and sector competitors to offer products at ancillary employment they create in varnishes. those prices, or certainly benchmark the ecosystem around themselves. in service/product delivery that profi- They also have some unique strength Sunrise sectors in Miniratna 2 teering often would not be able to de- in being able to give back to society. Be- category liver. BIBCOL is a case in point. cause they often serve diverse geogra- In this category we see a lot of sun- The findings have several implica- phies, they can, through their CSR in- rise companies which are invested tions for how PSUs should plan their frastructure, offer much more back to into niche areas that show promis- journey and how even their self-eval- society in terms of health and education. ing performance in key parameters uation should be nuanced. Procedural Like the bureaucracy was once such as asset utilisation and relative called the steel frame of India, PSUs growth and adaptation. For example, can still be the bulwark of India’s state- the Handicraft and Handlooms Export Overall, as far as all the sponsored, mission focussed technol- Corporation of India shows a promis- PSUs are concerned, there ogy incubators and hard wires of its ing performance in asset utilisation, infrastructure. Modern management while Bharat Immunologicals and Bio- are just 30% PSUs that techniques with a niche focus will still logicals Corporation Limited (BIBCOL) have a score of above 100 have them deliver the goods of a pri- in relative growth and adaptation – a vate sector company with a lot of social category where most PSUs have not for strategic investments. and societal goodwill. They are like the performed well. This has been possible As far as maintaining MTNL phone line, which we still prefer because of their focus on innovation. to have in our households, at least one The company has many firsts to its growth is concerned, only if not all. A little metamorphosis and credit. It has been the first to provide about 15% are near the then they can still morph the nation! n alternate therapy for diarrhea treat- ment, dispersible iron folic acid tab- industry benchmarks, while Mrug, founder and CEO of M76 Analyt- lets, vitamin and mineral mixtures and the rest are below. ics, oversaw the Governance Now PSU other healthcare products developed Awards 2016 evaluation and was a jury through in-house R&D. member

56 GovernanceNow | January 1-15, 2017 Winners all! Strategic Performance Miniratna II & Others: IRCON Infrastructure & Maharatna: GAIL (India) Ltd Services Ltd Best Performance Navratna: Power Finance Corporation Ltd, (Financial) NMDC Ltd (Jury Choice) ICT Initiative Maharatna: Coal India Ltd Maharatna: Oil & Natural Gas Corporation Ltd Miniratna I: Numaligarh Refinery Ltd Navratna: Power Finance Corporation Ltd Navratna: Hindustan Aeronautics Ltd Miniratna II & Others: India Trade Promotion Miniratna I: Rashtriya Chemicals & Fertilizers Ltd Organisation Miniratna I: ONGC Videsh Ltd Miniratna II & Others: Rajasthan Electronics Miniratna II & Others: India Infrastructure Asset Utilisation & Instruments Ltd Finance Company Ltd Maharatna: Coal India Ltd Navratna: Rural Electrification CorporationLtd Technology Adoption Miniratna I: Numaligarh Refinery Ltd, Balmer Maharatna: Bharat Heavy Electricals Ltd Best Performance (Overall) Lawrie & Company Ltd (Jury Choice) Navratna: Bharat Electronics Ltd Maharatna: Oil & Natural Gas Corporation Ltd Miniratna II & Others: Handicrafts & Miniratna I: RailTel Corporation of India Ltd Navratna: Hindustan Petroleum Corporation Ltd National Highways & Handlooms Exports Corporation of India Ltd Miniratna II & Others: Miniratna I: RailTel Corporation Of India Ltd Infrastructure Development Corporation Ltd Miniratna II & Others: Rajasthan Electronics & Employee Productivity Instruments Ltd, Rail Vikas Nigam Ltd (Jury Choice) Maharatna: NTPC Ltd Environmental Sustainability Navratna: Power Finance Corporation Ltd Maharatna: Oil & Natural Gas Corporation Ltd Miniratna I: ONGC Videsh Ltd Navratna: Bharat Electronics Ltd CSR Initiative Miniratna II & Others: Indian Railway Finance Miniratna I: ONGC Videsh Ltd Maharatna: Oil & Natural Gas Corporation Ltd, Corporation Ltd Miniratna II & Others: Rajasthan Electronics Indian Oil Corporation Ltd (Jury Choice) & Instruments Ltd Navratna: Hindustan Aeronautics Ltd, Relative Growth & Adaptation Engineers India Ltd (Jury Choice) Maharatna: Steel Authority of India Ltd HR Initiative Miniratna I: India Tourism Development Oil & Natural Gas Corporation Ltd Navratna: Rural Electrification Corporation Ltd, Maharatna: Corporation Rashtriya Ispat Nigam Ltd (Jury Choice) Navratna: Hindustan Aeronautics Ltd Miniratna II & Others: Rajasthan Electronics Miniratna I: Rashtriya Chemicals & Fertilizers Ltd Miniratna I: IRCON International Ltd & Instruments Ltd, Konkan Railway Corporation Miniratna II & Others: Bharat Immunologicals Miniratna II & Others: EdCIL (India) Ltd (Jury Choice) & Biologicals Corporation Ltd Research & Development Strategic Investments Maharatna: Bharat Heavy Electricals Ltd value growth Maharatna: Coal India Ltd Navratna: Bharat Electronics Ltd Housing and Urban Development Corporation Ltd Navratna: Power Grid Corporation of India Ltd; Miniratna I: Goa Shipyard Ltd KIOCL Ltd Oil India Ltd (Jury Choice) Miniratna II & Others: Rajasthan Electronics RITES Ltd Miniratna I: State Trading Corporation of India Ltd & Instruments Ltd National Fertilizers Ltd

Jury members

Shri Jai Mrug Shri Ashish Mehta Shri Unnat Pandit Shri Vinit Goenka Shri Harbhajan Singh Psephologist, founder Editor OSD Member, IT Taskforce - Ministry IAS (retd), former DG, CEO, M76 Analytics Governance Now Ministry of Commerce and of Shipping, Road Transport & National Productivity Industry Highways Council

Shri M Narendra Smt Bela Banerjee Dr RL Bhatia Dr Srikanta K Panigrahi Shri Parul Soni Former CMD Member of erstwhile MoU Task Specialist in change Director-general, Global managing partner, Indian Overseas Bank Force and retired member- management and Indian Institute of Thinkthrough Consulting technical, Railway Claims organisational turnaround, Sustainable Development Tribunal founder, World CSR Day (IISD)

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