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Press Release [FREE Access]
Petro Intelligence » IOC: Behemoth Needs A Colossus As CMD

by R. Sasankan

Sanjiv SinghIndian Oil Corporation (IOC) is a behemoth. And as befits its status, the chairman of this New Delhi-based, state-owned corporation ought to have someone at the helm who strides across the corporate firmament like a colossus. Unfortunately, the country’s largest marketing company and also its largest crude refiner has only had one person who fit the bill -- C.R. Dasgupta – and that too in its infancy. For inexplicable reasons, the top honcho at IOC has always failed to measure up to the stature that one expects from IOC’s boss.

Dasgupta’s successors may have had all the minimum professional qualifications stipulated by the Public Enterprises Selection Board (PESB). Almost all, except one, managed to complete their tenures without getting into serious problems with the enforcement agencies. But did they make significant contributions to the fortunes of IOC? That is a question that needs to be lobbed to an oracle. Most would think not.

S.L. KhoslaThere has always been a built-in prejudice in favour of marketing people when it comes to the selection of CMD for the top post in IOC. For a long time after Independence, petroleum products did not need a marketing whiz. The country faced a massive deficit in production of oil products and the shortfall had to be met through imports.

This situation changed about 13 years ago after Reliance and Essar set up refineries in the state of Gujarat. The private refineries manage their business through exports while the PSUs such as IOC, BPCL and HPCL cater to the domestic market. The dominance of the PSU oil companies has remained unchallenged because they enjoy a virtual monopoly over the marketing infrastructure and only they are eligible for subsidy from the government for selling products below cost.

M.A. PathanA few years ago, I was chatting with the finance director of a company over lunch. At that time, the selection process for the CMD of a public sector unit had reached an advanced stage and the candidates had been shortlisted for interviews. I popped the question that everyone seemed to be asking: who would make it to the top? He promptly mentioned one name and his prediction proved absolutely correct. I reported this in a speculative news report which was later appreciated in the petroleum industry circles.

How could he make such an accurate prediction? I would not have reported it unless I also believed the appointment was a sure shot. My friend’s logic for his choice was simple: that particular candidate was handling a cash-rich portfolio and no other candidate in the race had such an advantage. The sad truth is that money plays a pivotal role in the selection of candidate by PESB which has representatives from the ministry of petroleum and natural gas. The marketing division of IOC had that advantage and they invariably make it to the top precisely on that strength.

Sarthak BehuriaRemember, however, that the PESB’s recommendation is not binding on the government. It can always reject it. The government, or the concerned minister, has the option to make its own appointment and inform the PESB accordingly. Mohan Kumaramangalam had appointed his brother as the CMD of Coal India and Rajiv Gandhi appointed Hazarika as the boss of MMTC without going through PESB.

But there was an exception. According to IOC sources, C.R. Dasgupta, whom I mentioned as IOC’s tallest boss, was a refinery man and not a marketing expert. In those days, money had not begun to influence the selection process.

IOC once had a bureaucrat as CMD who was an unmitigated disaster; there also was an IIM alumnus who disproved the perceived superiority of MBAs drawn from the Indian Institutes of Management. This may sound bizarre but there was also a banker who came through the upstream sector who remained a total outsider.

M.S. RamachandranAt one stage, IOC was sarcastically called the South Indian Corporation of India because the CMD at that time only felt comfortable in the company of South Indian directors. He had a weakness for the marketing division which he wanted a South Indian to head. He achieved this by transferring the director (marketing) to HR and brought the HR man to marketing. This would not have been possible without the consent of the minister who must have already been taken into confidence about the potential benefit of making such a swap. This is normally not done in PSU, but it happened in IOC.

R.S. ButolaThe very same CMD spoiled the prospects of his fellow directors by writing to ministry of petroleum and natural gas that none of them was competent to succeed him as CMD. He was wangling for an extension of his tenure which he did not get. But it paved the way for an outsider to become the boss of IOC. His manipulation forced the senior-most director with an excellent track record to resign and take up an assignment with Essar, a private refiner.

Was this CMD a bigot? I doubt it but he was wily to the core. He did nothing for IOC but everything for himself. He survived while his IOC batch mates who were simultaneously heading ONGC and GAIL ran into problems with the government and were shown the door though both still had some years to go before retirement. Unlike the other PSU oil refineries, IOC has its origin in Delhi. Its proximity to the centre of power seems to have influenced its style of the management.

I picked the subject for this week’s column because I have the advantage of not knowing the CMD-select Sanjiv Singh. Friends and acquaintances within IOC tell me he is competent and a man with a vision. The idea of setting up a 60 million ton refinery on the West Coast India was his brainchild. In India, selection is not normally made on the basis of competence which is often purely incidental. Singh seems to be an exception. Luckily for him, there was no resourceful rival from the marketing division of IOC. A refinery man has become the CMD of IOC after a gap of 36 years.



To download the latest issue 'Volume 30 Issue 24 - March 25, 2024', click here
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