by R. Sasankan
Indian
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.
There
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.
A
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.
Remember,
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.
At
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.
The
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 |