THE ISSUE of appointing independent directors in the board of Heavy Engineering giant BHEL is likely to rock the forthcoming Annual General Meeting (AGM), scheduled for September 15 at New Delhi.
A Bhopal based organisation- Public Sector Shareholders’ Association -has already prepared the ground for the same and has requested various authorities, including President, Prime Minister, Heavy Industries Minister and Secretary of the concerned department urging them to instruct the concerned officials not to support the resolution to appoint Shekhar Datta and Sanjay M Dadlika as independent directors, when it comes up.
The association has also raised some very relevant issues like the guidelines for appointing independent directors, their contribution in the growth of company and also about the qualification of Dadlika.
The practice of appointing independent directors on the boards of public limited companies has been started with an intention to bring eminent persons having special professional knowledge and experience for the growth of concerned companies and also for bringing new ideas. However, appointment of persons without such special professional knowledge or experience defeats the very purpose and meaning of appointing independent directors, said the representation of association sent to President, PM and other concerned.
While Datta, who also remained associated with the competitor of BHEL, is likely to play his second innings on the board of BHEL, Dadlika is a first timer. However, he does not have required qualifications and experience required for the job, alleged the representation.
The Association alleged that during the first term of Datta the turnover and profitability of BHEL had deteriorated. Citing the reason, the association alleged “Datta is closely associated with Crompton Greaves Group of companies who is a major competitor of BHEL for products such as power transformers, instrument transformers, switchgear, motors, traction motors, traction alternators and traction generators”.
The presence of Datta on the Board of BHEL would seriously jeopardize the interest of BHEL as he will have access to all confidential commercial, technological and strategical information of BHEL, said the representation of the Association. Dutta had remained on BHEL board from 1997 to 2000.
Vice President of the Association, M W Siddiqui also raised strong objection over the appointment of Dadlika. So far, senior bureaucrats, former top PSU executives and former top executives of financial institutes or high caliber academicians were appointed independent directors of BHEL, said Siddiqui.
However, the appointment of Dadlika is not in line with the aforesaid principles/practice of selecting eminent persons as independent directors, he added. From the details given in the Annual Report of BHEL for 2005-06, it seems that the commerce graduate Dadlika, a member of All India Congress Committee, has never occupied a regular executive level position. He seems to have occupied only voluntary/honorary positions.
“There may be, not one of two but over 5000 executives in BHEL who have better qualifications and experience than Dadlika.” “BHEL have many executives in its finance department those are having –CA, ICWA & Ph D qualifications and longer service experience than Dadlika. Similarly, BHEL has thousands of executives –graduate, postgraduate and ph D qualifications in engineering, MBAs, Doctors etc,” said the association representation.
Under such circumstances it is improper and unethical to appoint Dadlika as a Director of BHEL. He does not have any special qualifications or experience that would make him fit to become a director of BHEL, the Association alleged.