PSUs may be punished for missing targets
CENTRAL public sector enterprises (CPSEs) that miss annual targets should now brace to face the music. The government is likely to curtail CPSEs decisionmaking power if they miss their annual targets. These public sector units may lose certain powers to take financial and administrative decisions including those in the areas of mergers and acquisitions. The new norms would be applicable for all CPSEs including the Navratnas like ONGC, IOC, NTPC and BHEL among others. The government, however, may impose lesser penalties for companies in the social, financial, trading and consultancy sectors while primarily targeting the CPSEs in manufacturing and mining sectors. “We have directed formulation of stricter rules for signing of yearly memorandum of understanding (MoU) by the CPSEs with the parent ministry. The department would formulate severe penalties for companies not following the new norms,” an official in the department of public enterprises (DPE) said. As per a letter of the DPE dated November 16, 2007, all CPSEs including the sick and loss making are required to sign the MoU and follow the new norms. Even the CPSEs which have been approved by the government and are under formation are required to sign the memorandum with the parent ministry under the new guidelines. The department has prepared a list of activities on which the a particular company’s performance would be judged. The activities would also carry negative marks in case of non-compliance. The companies will be awarded negative mark of 1 for each 15 days delay in submitting the draft MoU, while their performance would be rated as poor if they do not sign the MoU before March 31. A poor marking would result in the government taking stricter actions against the company’s board and management and curtailing their powers to a certain extent. The company’s would also have to face penalty for delay in submitting performance evaluation report, audited accounts, balance sheets and any type of data that the department may require from time to time