Majority of independent directors at PSUs are ex-bureaucrats

NEW DELHI: Independent directors, including the country’s top businessmen and private sector managers, on the boards of state-run companies were expected to professionalize the top-decision making body.

Instead, a majority of these seats are now occupied by former bureaucrats and retired PSU executives with hardly a leading light from the private sector joining these boards.
Though the situation is not as precarious as in public sector banks and insurance companies, where small-time politicians, little-known chartered accountants, petrol pump owners and even new readers were appointed as government nominees, it is only marginally better.

At Coal India, at least two former coal secretaries — Alok Perti and C Balakrishnan — were appointed independent directors soon after they retired. Balakrishnan is also a director on the board of Neyveli Lignite, another PSU that he had handled during his stint as coal secretary.



Then, there are others such as former railway officers Sudhir Mathur and Pradeep Bhatnagar, who are on the board of Concor, a public sector entity under Indian Railways. Not having a former bureaucrat or a retired PSU executive is an exception.

There are only three companies — Rashtriaya Chemicals and Fertilizer, Rural Electrification Corporation, Chennai Petroleum and HMT among state-run companies — that are part of the 35-share BSE PSU Index that currently do not have an independent director, who was a retired government officer or a former public sector executive.

There is also Bharat Heavy Electricals Ltd ( Bhel) but the government has decided not to appoint an independent director there, leaving the decisionmaking at the top PSU completely in the hands of ministry officials and the management. Then, there are some such as Oil India Ltd, MRPL and Bharat Petroleum where only one of the five independent directors is a former babu.

At the other extreme are companies such as National Fertilizer, where all three independent directors are either retired babus or former PSU executives. At India’s top power firm, NTPC, seven out of the nine independent directors are from this group, and the number at MMTC is seven out of eight.

Till the four independent directors at Indian Oil Corporation were given marching orders by the company’s shareholders on Thursday, five out of the seven directors at the petroleum company were from the same category. And, at Concor, it’s three out of four.