Nearly every second listed state-owned company is yet to comply with the regulatory requirement of appointing a woman director on its board, well after the March 31 deadline announced by market regulator Sebi has passed.
Those in violation of the norm are bluechip public sector firms that include ONGC, NTPC Ltd, GAIL India Ltd, Bharat Electronics Ltd and BPCL.
Even as they have evidently struggled to appoint a woman on their boards, the compliance levels of PSUs on appointing the requisite number of independent directors on their boards is even worse. As on March 31, almost 90 per cent of listed PSUs had failed to meet the requirement of appointing an equivalent number of independent directors as the number of functional directors on their boards.
In all, there are a total of 68 government-owned companies — four owned by state governments and 64 by the central government — that are listed at the National Stock Exchange. Of these, according to data prepared by primary market advisory firm Prime Database, 31 did not have a woman director on board, which translates into almost 50 per cent of them being non-compliant.
Compared to this, the compliance levels of private sector players is significantly better. Of the 1,672 non-PSU firms that are listed on the NSE, just 149, or 9 per cent, were non-compliant, according to data updated until March 31, 2015.
A couple of senior PSU executives who were contacted for this report blamed the delay on the government — the principal shareholder in these firms. “The delay is procedural. The nomination (of the director) has to be done by the government and these formalities take time,” said a senior official with a state-owned energy sector firm, who did not wish to be named.
Responding to a query, an NTPC spokesperson said, “We had a woman director on our board till recently (Homai A Daruwalla was on the NTPC board till January 29, 2015)… The process (for a fresh appointment) is on.”
Queries emailed to Power Finance Corporation, Bharat Petroleum Corporation Ltd and Bharat Electronics Ltd on Monday did not elicit a response until the time of going to press. SAIL manages to fulfill the norm, thanks to one of the government nominees on its board — Bharathi Sivaswami Sihag (the Additional Secretary and Financial Advisor in the Steel Ministry) — being a woman.
On independent directors, the data from Prime Database shows that the compliance levels have sharply fallen. While 31 out of 68 PSUs were found to be non-compliant in the year ended March 2014, there has been a significant jump in those numbers after the new Companies Act came into force last year, which mandated that nominee directors cannot be treated as independent directors.
As a result, 64 of the 68 PSUs suddenly found themselves with less than adequate numbers of independent directors on their board as on March 31, 2015. The four government owned entities that met the independent director requirement at the end of March 2015 were Shipping Corporation, Power Grid Corporation of India, MOIL, Madras Fertilisers and IndBank Merchant Banking.
A number of independent directors on the board of PSUs had resigned last year after the new Companies Act came into force, that looked to increase their accountability.