If a public sector company fails to meet certain targets like m-cap, return on capital, asset-turnover ratio and Capex and production targets, its employees may face a steep reduction in performance-related pay (PRP).
As media reports, with revised matrix for the PRP, the government aims to include these criteria in the customary Memorandum of Understanding (MoUs) being signed between PSUs and administrative ministries in the current fiscal year.
As per the revised goals being framed for CPSEs, of the total assigned marks of 100, asset turnover, return on capital employed, and m-cap will carry 5 marks each. The company’s EBITDA as a percentage of revenue will account for 10 marks. The companies achieving the production target will get 20 marks instead of 10 earlier.
The CPSEs that fails to meet the revised criteria will not only leads to rating downgrades but also cut in its employee’s salary.
As per the current rules, CPSEs can fix the performance-related pay at 150 per cent of the basic salary for CMDs and 40 per cent of the basic pay of the lowest grade staff. The companies achieving ‘excellent’ performance (over 90 score) are eligible for 100 per cent PRP. Those scoring ‘very good’ and ‘good’ get 80 per cent and 60 per cent PRP.
As per the official data, the salary bill of around 250 CPSEs, which employ 15 lakh people, is worth around Rs 1.53 lakh crore (FY19 data). The government has set a disinvestment target of Rs 1.75 lakh crore for 2021-22. This is lower than Rs 2.1 lakh crore it hoped to garner from disinvestment in 2020-21.
Adverse market conditions because of the pandemic expected to fall short of the target, thus, affecting government’s disinvestment plans in 2020-21. The strategic sale of IDBI Bank, BPCL, Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India, among others, is expected to be completed in FY 2022.
