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DPE opposes performance related pay for CIL loss-making arms

Last Updated: Monday, September 9, 2013 - 17:33

New Delhi: Department of Public Enterprises has strongly objected to the Coal Ministry's proposal on performance related pay for executives of CIL's subsidiaries from its consolidated account, stating that it will have wider ramifications as other PSUs may seek similar dispensation.

The Committee of Secretaries (CoS) had met to deliberate on the Coal Ministry's proposal for providing performance linked pay but the meeting remained inconclusive as the panel has asked the DPE to review the plan.

"The CoS has asked the department to review the issue. Earlier, it was thought that this was an exceptional case but it was found that there are other PSUs which have similar issues," an official told PTI.

Therefore the proposal, if accepted, would have wider ramifications as other PSUs may also seek similar dispensation, the official added.

As per the DPE guidelines, in the absence of sufficient profit before tax (PBT), loss-making CPSEs are not allowed to distribute performance related pay and there is no concept of providing PRP based on the consolidated account of holding company.

"The DPE is not in favour of providing PRP to CIL's loss making arms, as it is not in line with its guidelines. They have strongly objected to any such move," said the official.

However, the Coal Ministry has sought permission for allowing Coal India Ltd to determine the corpus of PRP due since 2007 on profit before tax based on its consolidated accounts and not from the individual accounts of the subsidiaries.

CIL will have to shell out about Rs 200 crore on account of PRP to loss-making subsidiaries, including Eastern Coalfields Ltd (ECL), if the proposal is accepted. The coal major has already incurred an additional Rs 6,500 crore burden on account of recent pay revision.

The Coal Ministry in its proposal has said that CIL is the holding company which appointed executives and controlled the cadre, also transferring functionaries from one arm to another on promotion.

At present as per the 2007 pay revision, PRP is directly linked to PBT and rating of a PSU besides performance of individual executives.

CIL which accounts for over 80 percent of the domestic coal production has eight subsidiaries: ECL (West Bengal), BCCL (Jharkhand), Central Coalfields (Jharkhand), South Eastern Coalfields (Chhattisgarh), Western Coalfields (Maharashtra), Northern Coalfields (Madhya Pradesh), Mahanadi Coalfields (Orissa) and Central Mine Planning and Design Institute (Ranchi).

Of these, ECL and BCCL were loss-making in 2007-08.


First Published: Monday, September 9, 2013 - 17:33
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