The government was set to clear a proposal by the steel ministry to reduce the board size of state-run SAIL from 24 to 18, a development that would help the PSU speed up its decision making process, an official said.
The Department of Public Enterprises (DPE) had recently given its nod to the proposal, which would now be taken up by the steel ministry, before Prime Minister Manmohan Singh-headed Appointment Committee of the Cabinet (ACC) took it up for final approval, a senior government official said.
“With the DPE giving the green signal, the proposal to trim SAIL’s board has come back to the steel ministry, which will now move the ACC for seeking its final nod,” the official said, adding the entire exercise was likely to be completed in the next two months.
Post-downsizing, the SAIL board will have nine each functional and independent directors, which, as of now, are 12 each. The proposal also envisages doing away with the post of SAIL Chairman and re-designating it as Chairman and CEO.
Besides, none of the Managing Directors of the company’s five plants (Bokaro, Bhilai, Rourkela, Durgapur and IISCO) may find a permanent place in the restructured board of the PSU. “It would only be in cases related to the steel plants concerned that the Managing Directors would participate in the board meetings,” the official said.
If none of the managing directors figure in the restructured board of SAIL, the number of functional directors will come down to seven (from 12), which means the PSU would need to have an equal number of independent directors, according to Clause 49 of Secutrities and Exchange Board of India’s (Sebi’s) listing agreement.
The clause makes it compulsory for the board of a company with an Executive Chairman to have 50 per cent of non-Executive Directors.
SAIL has an Executive Chairman.
After the number of functional directors comes down to seven, SAIL proposes to create two new posts of Director, Raw Materials and Projects.
This will take up the total number of functional directors to nine, meaning that there would be another nine independent directors, which will take up the total board size to 18.
“Fewer people in SAIL board will ensure quicker decisions. This is important particularly as the PSU has embarked upon a mega expansion project,” the official said.
As part of its Rs 78,000-crore brownfield expansion, SAIL plans to increase its annual production capacity to 26.3 million tonnes from over 15 million tonnes by 2011-12.
