Psu

25 PSUs face de-listing for violating Sebi norms

New Delhi: Atleast 25 public sector undertakings (PSUs), including Bharat Heavy Electricals Limited (Bhel), MMTC, Oil and Natural Gas Corporation (ONGC), State Trading Corporation, and Steel Authority of India (SAIL) may face de-listing from stock exchanges due to non-compliance with Securities & Exchange Board of India’s (Sebi) listing norms. In its recent report on financial reporting by central public sector enterprises (CPSEs)—tabled in Parliament on July 9—the Comptroller and Auditor General (CAG) of India has pointed out various discrepancies, including less number of independent directors in the audit committee and not holding the required number of meetings by the CPSEs. The key deviation from the norms was found in the case of State Trading Corporation, MTNL, MMTC, Mangalore Refinery and Petrochemicals, Fertilizer and Chemicals Travancore (FCT), and Hindustan Fluorocarbons, where the number of independent directors in their respective audit committees was lower than stipulated at the end of March 31, 2008. While National Aluminium Company (Nalco) and Hindustan Copper Limited appointed independent directors on September 27, 2007 and January 6, 2008 respectively, Balmer Lawrie and Company, and sick firms Hindustan Cables, ITI Limited and Hindustan Photofilms (Manufacturing) Company did not have any independent officer in the committee at the end of 2007-08, the report added. Also, the respective committees of Bhel, Power Finance Corporation (PFC) and Power Grid Corporation of India (PGCIL) had a gap of more than four months in their meetings, which is against section II (B) of Clause 49. CAG also found instances where the committees did not perform their task properly. Audit committee of Hindustan Organic Chemicals Limited did not review the internal audit reports in any of its meetings during the year, while that of Shipping Corporation of India did not consider a performance audit report. Seeking to ensure good corporate governance, Sebi has formulated Clause 49 that stipulates the audit committee should have at least three members and two-third of the panel should consist of independent directors. In case of non-compliance with the provisions of Clause 49, stock exchanges could consider de-listing the company. In its audit, CAG found that chairmen of the audit committee of nine CPSEs including State Trading Corporation, MMTC and Fertilizer and Chemicals Travancore were not independent directors. ONGC, SAIL, Balmer Lawrie Investment Limited, Bongaigaon Refinery and Petrochemicals and National Aluminium Company were also found wanting with regard to having the mandatory whistle blower mechanism. Warm Regards KAUSHIK HARIYANI (9967600045) NNM SECURITIES PVT. LTD Member BSE/NSE/CDSL FRIENDS -

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