New Delhi : Corporate observers point out that the current Indigo imbroglio has tellingly driven an arrow into the heart of abysmal misadventure at Total Privatization of Indian Corporate Sector. Predictively, the minions, polity and champions of rampant capitalization have chosen to maintain radio silence. The discerning Indian Citizens however have painfully realized the real truth about Total Monopoly/Duopoly.
The laity has woken up to the grim fact that a handful of Corporate big wigs can bring India and the governing elite to its knees. And there were many who made hay while sun shined. More specifically scalped customers with predatory pricing in Airlines, Hotels and connected sectors.CCI and ethics be damned! The Parliament, Regulatory Bodies, Employee Confederations, Passenger Associations,et al become hapless onlookers when a determined Corporate, is bent on having its own way. The denial of culpability by the concerned Airline coupled with the cultured innocence of the all-knowing Babus ensured that totally unacceptable circumstances come to pass. Subsequent Optics and few slaps on the wrist was all that the authorities had to show. Definitely, it brought into sharp(alarming?) focus what Corporate India, in the hands of a few selected Capitalists could resort to. Unfortunately, Sector by Sector, Vertical by Vertical have been gobbled up by private players solely focused on Profits.
Be it hardcore Brick & Mortar – Steel, Coal, Cement, Aviation, Defense, Automobiles, Heavy Engineering, Textiles, Energy including Alternate Energy; Service Industries – Banking, Insurance, Hospitality; IT Driven Ventures like Telecom, Computer Hardware or Software; all have seen deep inroads being made by private ventures. Added to this, the constant refrain that Government has to move out of Indian Businesses makes for a heady recipe of an uncertain future. Although, the insinuations do not seem to die that only a few chosen few will be allowed to rule the roost. Doubters have even gone to the extent of saying that the Indigo imbroglio will be used to diminish its dominant status. Already it has been publicly announced that the ‘tear’ in the Indian sky will be widened to let some other players also to slip in!
Indian customers, normally are not actually a complaining lot as long as they receive goods and services at a competitive price. They are essentially not concerned in counting the trees as long as they get their mangoes. But does it really work out that way? We have seen many countries which were doing relatively well, go down, once total privatization was introduced. Greece, Brazil, Poland, Hungary, France, Germany etc. have had mixed fortunes.
NewsIP wishes to take its readers unto a the unique position of Energy Sector as a prime example of a place where, ‘Even Angels should fear to tread!’ This is one strategic sector where most nations like to step gingerly. China, France, Poland, Russia, Brazil, Malaysia, Japan etc. all have Government owned energy companies. India is still heavily dependent on fossil fuels for energy needs. India is the third largest Oil importer and currently has government companies in Upstream, Mid-Stream and Downstream Sectors.
It also has the largest Refiner in the world in the private sector and several other big private players. For some time now, experts have been voicing their opinion that maybe the Government of India has plans to have the Private Sector become dominant in Oil & Gas, Renewals etc. while PUSs should either be sold out or become suppliers and vendors for the Private Operators. Already, there is a movement towards gradual throttling of Oil & Gas PSUs. Structural changes including ease of investment in Upstream, Down Stream and Transportation Verticals have been set into motion. Common usage of Tankages, Pipelines, ATF Delivery Systems are getting in place. All of which is maybe good. But there are some things which seem out of place when it comes to Corporate Governance, Value Creation and Nation building.
To cite a few examples, industry insiders say, the Private Players refused to participate in the popular Pradhan Mantri Ujjwala Yojna, setting of hard core infrastructure, lukewarm response to Swach Bharat Abhiyan, low Capital Investments etc. The sanctions on import of Russian Crude was also managed by the Private players, in their own approach, making for windfall profits and introduction of Windfall Taxes for the first time in India. All this, the experts say, point towards profits maximization at all costs rather than create value. The Private Players seem to thrive in a situation of monopoly while publicly crying for a level playing field.
The Oil & Gas PSUs which have served India well in the past, during peace as well as war times, are certainly not the flavor of the season. This in spite of burnt fingers in the Aviation sector! God forbid, if a similar situation was to happen in the energy sector, India would be staring at an apocalypse.
Many experts point out, a Fortune 500 listed, PSU Oil & Gas Company as a Case Study. This Company has had to face numerous challenges from rivals. Despite all odds, It has been consistently posting profits, since its incorporation, as a single entity in 1964. In the Year ending March 2025, it announced an Annual Net Profit of Rs 12,962 Crore and an interim dividend of Rs 5 per share. As of 13/12/2025,market capitalization has reached $24.89 B. Its ranked as the 953th most valuable company globally by market capitalization.
The Company is High Tech intensive with a Professional Workforce of 29,941. Obviously, for managing such a company there is an evidently need of a highly astute set of leaders. As per data available (while going for print); The Company Board is Headed by a Chairman, has 6 Whole Time Directors, 2 Government Nominee Directors and 3 Independent Directors.
Recently, the Oil & Gas observers were surprised, at a series of Media reports, claiming that the Oil Ministry is considering a formula for a totally new board of this company. The plan proposes the removal of the posts of Director (R&D), Director (Planning & Business Development), and Director (Pipelines). The new board structure would consist of only Four Whole Time Directors viz. Finance, Marketing, Refineries, and HR— in addition to Chairman. Delayering and better efficiency is the declared aim.
Interestingly, those in the know, are aware how a PSU Board actually functions. Most Directors are tasked with Financial handling matters which have significant financial and technical consequences. Now, unlike Private Boards no Board Proposals/ Agenda is put to Vote. They are all unanimously passed and in case of non-approval, a Proposal/Agenda is simply withdrawn. Discussions can be held and even contrary views recorded but there is absolutely no fundamental ‘opposition’. Further, the Government ensures its interests through its nominees on the Board. The independent Directors are carefully chosen with Government having the ultimate say in their appointments. In such circumstances, its baffling that the Government is suggesting a reduction in the number of Directors. Those positions on the chopping black are certainly not redundant. BD, R&D and Pipelines need, by their complex and varied nature of working, separate individuals who can do full justice to them.
The contra view of loading other Directors could become disastrous. Oil & Gas is a highly technical, innovation and research driven arena. The sector is hazardous and accidents can have serious consequences. The Company has a well-diversified portfolio. Petrochem and Alternate Fuel is the future of any Oil & Gas Company. Many are not aware even in the company , The majority of Profit, comes from the Transportation wing viz. Pipelines and not from Refineries or Marketing. In fact, the other company which is primarily a much smaller Pipeline Company has more Directors on Board than this one ! So does it make for much business sense in removing these positions? Also, will be there be proportional reduction of Govt. nominees or Independent Directors?
Oil & Gas veterans point out there can be several fundamental issues which could have lead the Government and ministry to consider removal of Director level positions in the company. The Bureaucrats are usually not very comfortable in dealing with the deeper nuances of Technical issues. Their basic training is on Administration and not on domain knowledge. So the less number of technical/ specialized experts it’s better for a generalist to manage the show. Of course, matters of Pay Parity, Position Power and Accountability are there. The factor of Performance Linked Bonus payable to PSU employees including Directors irks most bureaucrats.
The formulas duly approved by the Government itself, now faces opposition. With the 8th Pay Commission Report looming large, these felt fears bureaucrats want addressed before the final report. Accountability everyone knows, is either of the operatives or of those holding political positions. Bureaucrats though calling all the shots and making policies, rarely are held responsible. Most citizens are now saying how is it possible that Indigo working was unknown to the Aviation Ministry officials? Many amongst the common public, are aware about the rigorous presentations and follow up rituals which all ministries carry out.
Then how come no bureaucrat is ever held responsible? To take a cue from the services, basically, the Bureaucrats act as Staff functionaries while Directors etc. as Line Functionaries. Therefore, the Staff functionaries, in advisory capacity, can never be held responsible even when they wield ultimate power. Under these circumstances, knowledge is not power. Ascribed power is supreme. Then there is the matter regarding Privatization of the company(Readers can look up relevant articles of NewsIP, references given hereunder).
The exercise would be definitely easier with a lighter Board than a fully loaded one. Some, may even be believing that reduction in Leadership Strength may be good Optics. Well, a word of caution, Oligopolists, especially in the Oil & Gas Sector, in the long run, are known to run foul of Governments!
Of course, the ‘fallen heroes’ of this company certainly deserve a word of consolation:गिरते हैं सहसवार ही मैदाने जंग में वो तिफ्ल क्या गिरेंगे जो घुटनो के बल चलते हैं ।
