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Chapter- VI
Policy Perspectives
GAIL (India) Limited is one of the most innovative and progressive
public sector companies of India. It was in 1984, that the Government of
India announced the commissioning of a Company called Gas Authority of
India Limited, to work for building and operating the natural gas
transportation set up on India. This Company was to work in the area of
natural gas only. After twenty six years of its commissioning, this
Company has become a major energy Company and is rated by 'Platts,' an
international survey company, as number one integrated energy Company
of Asia and number two at Global level. The Company has set up a number
of milestones, not only in India but at the world level too. Today, it is truly
a most diversified international energy company of India, which has
marked its presence. It has a number of energy areas. The Company and
the Government of India are investing a lot of money and time, to come up
with strong policy initiatives for its future growth.
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Some very important policies are mentioned as under:
(i) Green Energy-Green Company
Green Energy means an area in the field of energy creation by
reducing carbon emission levels or the type of energy which is produced by
deploying most environment friendly non conventional fuels and
infrastructure. GAIL (India) Limited is popularly known as 'Green
Company of India', because it is providing the manufacturing, marketing
and infrastructure facilities in the area of Green fuels and hydro carbons
like Natural Gas, CNG, PNG, LNG, LPG etc.
There is an immense scope for the Company to invest and work in 'Green'
areas. Green fuels are comparatively cheaper and cleaner then traditional
fossil fuels. The Government of India has made a commitment to reduce
its carbon emissions by a minimum 20 percent by 2020. India is also going
to be the third largest consumer of energy after USA and China, from its
fifth position at present, in the coming years. At present the per capita
energy consumption in India is one of the lowest in the world (0.3 tonnes
of oil equivalent against the world average of 1.8).1 globally, the natural
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1. Annual Report 2009-10, GAIL (India) Limited, New Delhi, p. 39
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gas constitutes about 24 percent of energy areas which in India, it accounts
for about 9 percent. This is a very poor index and the Government of India
has handed over this charge to GAIL (India) limited to enhance the level of
natural gas consumption in India. The Company may see its present
turnover of about Rs. 25000 crore to be four times in coming ten years. The
Company has already shown a compounded Annual Growth Rate over 13
percent in its performance in recent years.
The Government of India is reducing the subsidies on oil products
gradually. It is going to add huge amounts of profits to the Company. Till
now all the profit making Companies in oil and gas sector bear the brunt of
subsidies. GAIL (India) Limited has bore the additional burden of more
than Rs. 1326 crore during the financial year 2009-10. The Company has
designed and planned its expansion policies for future to take big strides in
Green Energy areas.
(ii) Expansion Policy
The Company has more than seventy percent market share in the
areas of gas transmission. It has planned to maintain its dominance in the
area. It has expansion plans for building more than 7500 km of gas
pipelines in the country. India has a vast potential for growth in this area
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because the percentage covered, at present, for example in the gas
pipelining is not even twenty percent of the total possible area. These
projects need huge investments in thousands of crores of Rupees and the
Company is very ambitious to go in a very big way for expending its
networks. The Company is going to invest more than Rs. 30000 crores in
next five years to install new pipelines in gas transmission. These would
include large trunk pipelines along with smaller pipelines which would
help the Company to complete its dream project of 'National Gas Grid.'
The company owns and operates the biggest gas based petrochemical
plant of India at Pata and has planned to double its production capacity in
coming five years. Presently this plant has a capacity of producing 420,000
TPA of Ethylene and 410,000 TPA of Polymers i.e. HDPE and LLDPE.
GAIL (India) Limited has some very ambitious plans which are
listed us under:
Developing a State-of-the-art National Gas Grid in India
To provide Green Energy in every part of the country, to every
industry in manufacturing and production sector, especially power,
fertilizers, steel, infrastructure etc.
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To provide clean fuel to every household in the country in form of
Green Kitchens and CNG to every vehicle.
To provide bulk qualities of polymers and petrochemicals in order to
replace the use of wood and other natural resources like coal and
other fossil fuels.
To enhance the number of social welfare activities though its
Corporate Social Responsibility projects.
To provide World class training to its employees and future trainees
of not only India, but the whole world in general and South-East
Asia in particular in the areas of hydrocarbons, gas transmission and
Human Resource Management.
To create a large pool of Knowledge Capital in energy areas.
To provide large employment opportunities in the specialized energy
areas.
To develop its capacities in exploration and production (E and P) of
natural gas.
To maintain its position of dominance in energy areas by signing
more joint ventures and opening subsidiary companies.
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The above listed parameters are very broad in nature with each of the areas
having very large internal dimensions. The Company needs a lot of
research, investments both capital and human, government support
mechanism, strategic management policies, focused business initiatives,
ultrra hi-tech IT enabled infrastructure and a lot more.
Some broad areas under 'Policy perspectives' with futuristic
approach to development and expansion of the Company are suggested
through this piece of research.
(i) Strategic Human Resource Management Policies
The Company has very ambitious plans of growth and expansion in
the coming times. Presently the Company has less than four thousand
employees who are managing its affairs. With the growth plans in mind,
the Company has to develop very strategic HRM plans. The number of its
employees is expected to grow at a very fast rate. The Company already
has very innovative HRM initiatives in practice, which have been studied
in previous chapters. The growing future demands of more human
resources will add new dimensions and challenges. So the Company should
develop a futuristic, plan like 'Strategic HRM plan 2020', which should
address to all future challenges.
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(ii) Heavy Investment Generation Policies
The Company has future plans of development and expansion in its
mind. The laying of additional 5000 km network of pipelines for gas
transmission alone, needs an amount of Rs. 30,000 crore in coming times.
The Company has plans to raise its turnover from Rs. 25000 crore to Rs.
100000 crore in coming five years. It needs to plan some concrete plans to
raise these huge amounts. Expanding its sales and industrial base is a must
for the Company. A well planned 'Financial Plan Document-Meeting the
Next Decade Requirements' kind of plan must start taking its place. It
needs to plan an 'Economic Advisory Cell' which should assist the Board
of Directors in finance raising plans which may include offering public
issue globally, making tie-ups with World Bank, UNO an other
international agencies for grants etc. It can lead the world in the areas of
Green Energy and can ask for international assistance for meeting its future
requirements through some ambitious plans like 'Green Earth', 'Save
Earth' 'Save Environment' etc.
(iv) Strategic Infrastructure Development Policies
The Company has the world class infrastructure with all
international standard certification. The future expansions will call for
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more plants and industrial units. The Company needs to have more
infrastructures in future. A new plan like 'Strategic Infrastructure
Development Plan 2020' must be drafted and planned. There is a need for
'Comprehensive IT Initiatives Plan' which should provide all kind of IT
solutions to its future infrastructures. The Company must develop some
strategic plans to have international tie-ups with leading infrastructure
building companies as well IT companies like IBM, Microsoft, Apple, Dell
etc.
GAIL (India) Limited should open up minimum two big subsidiaries
in form of GAIL IT Limited and GAIL Infrastructure Development
Company etc. to meet its requirements and also raising equity through
public funds for the Company.
(v) Creating and Developing New Training Institutes
The Company, at present, has two major training institutes at Jaipur
and Noida. In order to provide a boost to its HRD activities, the Company
must have at least two more training institutes, one each in South West and
North East part of the country. There is a greater need of training to its
employees and with expected increase in number of its employees in
coming times.
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(vi) Creation of Knowledge Capital
The Company will be in a great demand of managers, technical
experts and working force in coming years in executive and non executive
categories of employees. The demand for experts and specialists in various
energy, technical and management areas is expected to be doubled very
soon.
The Company must develop some E-school (Energy-School)
concept in the country to develop 'GAIL Institutes for Specialized
Learning' or It should start some University or colleges in both
management and energy areas, where special courses, should be available
as academic degrees, which are linked to the needs of the Company. There
is already a University known as University of Petroleum Energy Studies
(UPES) at Dehradun, Uttranchal, which is running some special energy
related courses. GAIL (India) Limited can have some strategic tie ups with
this University or other universities and institutes of the world. The
Company can guide the present Universities and colleges to start new job
oriented courses for its requirements. Creation of 'Knowledge Captial'
should be atop priority agenda for the Company.
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(vii) Creation of GAIL Townships
Coming times in the Company will demand more townships with the
increase in number of employees and expansion of plants. The townships
of GAIL (India) Limited should be world class townships where there is an
extensive use of Green energy and use of non conventional sources of
energy like Solar Energy and Wind Energy. All the transportation should
run on CNG's small capacity power plants for townships running on Gas,
buildings, schools, residences etc. provided with Green energy concept
must be the feature of Company townships.
It should set a new trend for reality sector also, to build and operate
Green Townships.
(viii) Strategic Policies for Bio fuel Plants
Agriculture sector is still the oldest and easiest professions found in
India. The rural areas of the villages are not properly equipped with
management of agricultural and bio wastes. Brazil has set new standards in
the world in the areas of bio fuels as cheaper sources of energy and a
replacement for petroleum products.
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GAIL (India) Limited should come forward and take initiatives to
help the rural folk with solutions in the areas of biomass waste
management. Gas based or other non conventional based energy inputs can
provide some help to agriculture sector to go professional in its approach.
(ix) Policy for Public Relations and Awareness
The Company has done a lot in the areas of Green energy creation,
yet it has not been able to create awareness in this area at the desired level.
There are still lot of people in India, who have not heard anything about
Green energy areas.
GAIL (India) Limited must develop a strategic plan to popularize the
concept of Green Energy and its use in daily life. It should have an
'Advance Centre for Popularizing Green Energy' along with a
developed Public Relation Office/cell. Further it should plan for 'GAIL
FM Stations' to impart knowledge in the new energy areas.
(x) Strategic Environmental Plan
The Company has to develop some strategic environmental plans
with an alliance with Ministry of Environment. Coming times will demand
more strategic environmental plans, with the increase in industrialization
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procession in the country. Saving environment should be matter of prime
importance for the Company and it must develop macro level plans instead
of micro level plans concerned to its own plants only.
(xi) New Corporate Plans
The Company must plan in advance some very innovative corporate
plans to stay in tough competition, it faces today with other energy
companies of both national and international level. 'More use of
technology for creating a Simpler Life' type ideologies should form the
basis, for future corporate plans. The new 'Corporate Citizen' laws of
future will demand very planned corporate policies from the Company.
(xii) Creation of Green Energy Shopping Malls
The future will demand more energy which in turn will raise the
demand of green energy. Till now, the basic inputs required to restructure
an existing system based on conventional resources, are very costly. The
Company must devise some low cost and easy to handle systems which can
increase the use of gas or other sources. These systems must be affordable
to a common man also. GAIL can start manufacturing or marketing low
cost, subsidized and standardized energy products. These products should
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be available at GAIL Shopping Malls or GAIL Energy Shops in future. It
will help the Company to enter every house hold in the country.
(xiii) Expansion of City Gas Distribution Network
The Company will need a robust City Gas Distribution (CGD) policy
in the coming times. At present, the Company has a capacity to feed at least
five to six times the areas; it is feeding with its subsidiary GAIL Gas
Limited. The problem is the non availability of pipeline system for its
transmission to domestic units. India has a very big market for such
projects and the Company can play a dominant role in this area in coming
times and raise its sales and profit ratio.
(xiv) People Oriented Policies
The Company is helping the Government and people of India by
providing multifaceted facilities in energy areas. Still, it has not been
possible for the Company to do something miraculous in this regard. Its
policies like Corporate Social Responsibility, which has become a core
value to the present corporate companies, have not brought the desired
results. A lot needs to be done to lift the downtrodden and needy sections
of society. No doubt, the Company is a professional business Company, yet
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is has to take up some more social issues. It contributes 2 percent of its
Profit after Tax (PAT) on CSR issues.
Although here are thousands of people who get benefited by the
social measures being taken up by the Company's policies' yet, the
Company must plan some more People oriented policies by conducting
some survey of need based classes.
(xv) Cost Effectiveness Policies
The Company must plan and develop some cost effective policies for
its future savings. There must be a GAIL Cost Effectiveness Cell which
should operate from corporate office and having its branches in all major
plants of the Company. The central office should include the top level
officers of the Company who have some in-depth knowledge of various
issues. Following structure of the proposed cell is suggested:
Organizational Structure of GAIL Cost Effectiveness Cell
Core Corporate level Cost Effectiveness Cell: It should operate from
corporate office, New Delhi and have following organizational structure:
Chairman and Managing Director (CMD)
4-Directors (Finance, HR, IT, Plant Maintenance)
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8-10 Officers (up to the level of GM, DGM)
4 Co-opted Members (Subject experts) from Top level
Educational/Consultancy organizations.
Charted Accountant
Plant level Cost Effectiveness Cell: It should operate from plant level
with following organizational structure.
ED/GM
4 officers from Plant (GM's and DGM's)
2 officers from middle management (Manager, Deputy Manager)
4 Co-opted Members (Subject Experts from Top level
Educational/Consultancy organizations
1 Charted Accountant
This plant level cell should be linked to the corporate office on 24x7
format.
Three Module System for Cost Effectiveness Cell
The general strategy of this Cost Effectiveness Cell should be to work on
three modules namely, Annual module, Monthly Module and Daily
Module. The objectives and targets set for annual basis should be linked to
monthly basis which further should be linked to daily targets. There should
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be close monitoring of all policies and their implementation. Focus areas
for these cells can be:
Plant Maintenance
Office and Management
Allowances/Perks of Directors
IT areas
Township Maintenance
Staff Transportation (et. Staff Buses instead of individual
vehicles and then cutting the conveyance allowances)
Review of allowances/perks
T.A./D.A scrutiny
Raw Material Wastage
Power Consumption
Waste Management and optimum utilization of Resources
(xvi) Threat and Challenge Management
The Company is growing at a very fast rate (nearly 13 percent for
last decade) and its future growth plans are very ambitious. It is operating
into a number of business areas in energy, at both international and national
level.
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The international business environment of today is very promising as
well as challenging due to a tough competition in all areas and segments.
Future of this business will pose more challenges like dominance of big
capitalist economies like G-7 group, the individual corporate giants of
these countries, new international laws which may favour the most
developed countries, creation of new international bodies which may frame
new restricting policies for developing nations and its companies, demand
and supply gaps, environmental challenges, population challenges,
depleting sources of energy, natural disasters, economic slowdowns, new
innovations and increasing expectancy levels of quality assurances.
The national business environment is full of risks and challenges as
well. There are risks of slow economic growth, large gap in demand and
supply population crises, instable governments, increase of loss making
units in public sector, subsidy and concession challenges, HRM challenges,
knowledge capital shortage, natural disasters, changing government
policies, increasing political interference, changing price fixing
mechanism, increasing crime and social unrest, increasing scams and
scandals, resource generation challenges, state government policy
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challenges, power and energy crises and increasing competition from big
private players like Reliance industries.
All such challenges are economic, social, technological and
environmental in nature. The Company must plan in advance for these
challenges with a 'Pro-active approach' rather than 'Active approach'.
There must be a kind of 'Threats and Challenges Management
System', deployed on permanent basis in the Company. It must plan and
evolve some strategic policy framework with futuristic approach in this
area. The Company must start contributing to a kind of 'Contingency
Fund' which should be available at times of risks and threats. The
recommendations of this core system should be mandatory for the
Company.
(xviii) Business Expansion and Planning Cell
The Company has a very vast business segmental area in the country
as well as at global level. It has expended in its business in manifolds
during its journey of twenty six years. The process of business expansion is
still on, and each year some new targets are set by the management.
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Till date, the Company has a mechanism of passing all resolutions
and new targets in its Board of Directors meetings. It must plan a new cell
known as GAIL Business Expansion and Planning Cell. This cell should
be like a statutory and permanent body in GAIL having both permanent
and ex-officio members.
The Company at present runs the affairs of business expansion and
planning through its non statutory committee known as Business
Development and Marketing Committee. Its composition is as under:
Mr. R. M. Sethi- Chairman
Director (Finance)
Director (BD)
Director (Marketing)
Mr. Apurva Chandra
Dr. U.K. Sen
Prof. A. Q. Contractor
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The observations from this research indicate that there were total
nine Board of Director's meetings held in n the year 2009-10. There was no
data available about the number of meetings of the above mentioned non
statutory committee in the same year. Many of its members are the members
of other committees (non statutory). It is therefore suggested that instead of
having a non statutory committee, the Company must make a full time Cell in
this core business area. That full time cell can interact on regular base with all
plant heads and external international consultancy agencies.
(xix) Business Diversification Policies
Although, the Company has a non statutory committee in the form of
Business Development and Marketing Committee, it is suggested that it
should plan separate business diversification policies. There is a growing need
in the business and corporate organizations in general and GAIL (India)
Limited in particular to make a clear cut distinction in business expansion and
business diversification strategies. Business expansion and development is
mostly related to expand the existing portfolios only.
GAIL (India) Limited has diversified into various business segments
like marketing and transmission of gas, exploration and production, City Gas
Distribution, LPG, LNG, CNG, areas and telecommunication areas.
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There is a lot of scope in manufacturing sector for the Company. It is
producing raw material as polymers and polyethylene. It can start
manufacturing the byproducts on its own. Products of daily use in the areas of
Green Kitchens and appliances, polymer furniture and building materials,
polymer products for daily utilities can be the possible options. It can open its
Company operated showrooms to sell its products by offering 'franchise'. It
can open its high-tech kiosks at all leading international airports of the country
and other parts of the world. It must enter into retail sector for selling its low
cost products like crates, furniture, toys, showcases, modular kitchens, doors
etc. It must have strong tie-ups with media and fashion agencies. These
sources can popularize the idea of using more 'Green' products in coming
times.
It must encourage some film and documentary makers to produce
programs based on GAIL products and create awareness about its business.
It must evolve a strong strategy to publish literature of its core
business areas in both hard and soft versions to popularize its strategies.
Regular advertisements in national and international newspapers, journals,
magazines and internet can help in many ways to the Company.
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(xx) Research and Development Policies
There is a strong need for encouraging new research and
development in the Company. It must build a very sophisticated research and
development cell involving top experts, scientists, consultants and researchers.
The Company must focus and invest in this area in coming times. Research
and development tasks in the Company should be oriented towards following
areas:
Research and Development for Company
Research and Development for Country
Research and Development for all stakeholders and customers
Research and Development for individuals.
It must invite individual researchers to come forward and go for
research in core areas for Company like HRM, Economics, Commerce, and
Technical subjects of various engineering disciplines, Environment, Public
Policy and many more. It should reward the individual researches on
various issues related to Company to encourage more research.
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So some suggestions in the form of 'Policy Perspectives' have been
incorporated in this research work, which may prove useful to the
Company in coming times. It is not claimed that all these suggestions are
complete in nature. It is an attempt to highlight some emerging demands
for the Company to formulate some future policies and strategies.