Vol 3, PW 9 (26 May 99) People & Policy

All the signs are encouraging.

If past policy statements are to be believed, the newly empowered Navratna boards will be free to spend as much as they like in capital expenditure to replace old equipment and buy new items. Unlike before, there will be no financial ceiling on expenditure for capital goods.

They will also be free to sign technology joint ventures or strategic alliances with whoever they please, without first running the gauntlet of several government bodies for permission (ie. the notoriously slow Public Investment Board).

They will also be allowed to set up fully-owned subsidiaries in India or abroad; obtain technology when it suits them; and carry out capital and organisational restructuring. Crucially they will no longer need the approval of Indias Cabinet Committee on Economic Affairs (CCEA) to set up joint ventures with foreign partners.

Approval need only be sought when the total investment in a single project is over Rs200cr ($48m) or 5% of the companys net worth, or (confusingly) whichever is lowest. GAIL tells this report its net worth is approximately Rs4,500 cr ($1.07bn).

ONGC tells this report its net worth is approximately Rs22,000 cr ($5.2bn). Approval from the CCEA can often take several months.

Permission here is only required when the sum total of investments in a series of projects in a joint venture exceeds 15% of the PSUs net worth. All very encouraging but in India nothing is as it seems and the next few months should tell us if the changes are real, or just cosmetic.

LNG Summit