'PSU disinvestment through IPOs desirable'

Disinvestment in PSUs must be done through IPOs. This helps bring about accountability and there is a greater scope for the public's interests to be protected, said S M Dewan, director general, Standing Conference of Public Enterprises (SCOPE).

What is required today is bold management in PSUs, not just good management, he added and corporate governance is what is required. Hence, independent directors are necessary. For PSUs to grow, the board must be free of government control, said Dewan.

By divesting through IPOs, the company's interests and in turn the shareholder's interests will be reinforced. For instance, he said, IOC's products pricing must be decided by the company's board and not by the government.

With price control the company makes losses and in turn it is the shareholders who stand to lose in a major way, he added.

Financial and administrative autonomy give PSUs the scope to grow as decisions are made faster and so is their implementation, he said.

The PSUs earned Rs 55,000 crore as profits last year, said Dewan. There was a 21.4 per cent rate of return on capital (RoC). The RoC had risen from just 11 per cent logged 10 years ago. The PSUs had revenues of Rs 5.84 lakh crore last year and this made up 16 per cent of the GDP.

He was speaking on the sidelines of an interactive programme on 'Corporate Social Responsibility and Global Compact to Improve Competitiveness' on Tuesday.

The Global Compact programme was launched by UN Secretary-General Kofi Annan in July 2000 and has grown to become the world's largest corporate responsibility initiative in the world.

According to the UN, the Global Compact's 10 principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from: 1. The Universal Declaration of Human Rights; 2. The ILO declaration on Fundamental principles and right to work; 3. The Rio Declaration on environment and Development and 4. The UN Convention Against Corruption.