Ongc Corporate Governence
Corporate Governance Corporate Governance is a reflection of the company’s culture, their relationship with stakeholders and commitment to values. ONGC has a pioneer in benchmarking its corporate governance practices with the best in the world. ONGC Corporate Governance philosophy is based on the following principles:- Achieving high level of transparency, openness and accountability and fairness in all areas of operation.
Promoting ethical conduct throughout the organization with primary objective of enhancing shareholder’s value.Sound system of internal control to mitigate the risks. Compliance of law, rules and regulation in true letter and spirit. Independent verification of the company’s financial reporting Strategic supervision by the board of directors of appropriate composition, size, varied experience and commitment to discharge their responsibilities. Timely and balanced disclosure of all material information to all Stakeholders. Protection of the interest of all Stakeholders In recognition of excellence in corporate governance, the following awards have been conferred on ONGC: I.SCOPE Meritorious Award for Corporate Governance 2006-07 received II. ICSI National Award for Excellence in Corporate Governance 2003 III. Golden Peacock Global Award for Corporate Governance in Emerging Economics – 2005, 2007 and 2008 by World Council, U. K IV. Golden Peacock Award foe Excellence in Corporate governance by the Institute of Directors in the years 2002, 2005 and 2006. The company is managed by the Board of Directors which explicates strategies, policies and reviews its performance.The board of Directors has an adequate combination of Functional and Non-Executive Director. The company has a practice of periodic retreats where all the members of the Board and senior officials of the Ministry of Petroleum & Natural Gas discuss issues of Corporate Strategy and Policy. The company being a PSU, all Directors are appointed/ Nominated by the President of India. Board / committee Meetings and Procedures: 1. Institutionalized decision making process 2. Scheduling and selection of Agenda items for Board/Committee Meetings 3.Recording minutes of proceedings at the Board Meeting 4. Follow up mechanism 5. Compliance 6. Training and evaluation of non-executive Board members To have the benefit of cumulative knowledge and experience of the ONGC family, an assembly of the past and present members of the erstwhile Oil & Natural Gas Commission and Board is organized every year. The key Executives in-charge of Assets, Basins, Services and Institutes meet periodically with CMD and the functional Directors to review performance and to formulate future plans.The company has the following committees of the board: Audit & Ethics Committee: The role of audit & ethics committee includes the following: i. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct , sufficient and credible. ii. Recommending to the board, the appointment, re-appointment and if required , the replacement or removal of the statutory auditor and the fixation of audition fees. ii. Approval of payment to statutory auditors for any services rendered by the statutory auditors. iv. Reviewing with the management , the statement of uses / application of funds raised through an issue, the statement funds utilized for purposes other than those stated in the offer document and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps. v.Reviewing with the management performance of statutory and internal auditors adequacy of the internal control systems. vi. Reviewing with the management, the quarterly financial statement before submission to the board of approval. vii. Reviewing the adequacy of internal audit function viii. Discussion with internal auditors any significant findings and follow up there on. ix. Discussion with the auditory before the audit commences about the nature and scope of audit. x. To review the functioning of the whistle blower mechanism. Remuneration Committee:ONGC being a Government Company, appointed and terms and condition of remuneration of Executive Directors are determined by the Government through administrative ministry, the Ministry of Petroleum & National Gas. Non Executive Part time official Directors do not draw any remuneration. Shareholder’s/ Investors Grievance Committee: The Shareholder’s/ Investors Grievances committee specifically looks into redressing of Shareholders and investors complaints pertaining to transfer of shares, non receipt of annual reports, dividend payments and other miscellaneous reports.The committee also monitors implementation and compliance of company’s code of conduct for insider trading in ONGC’s securities. Human Resource management Committee: The term of reference include consideration of all issues concerning human resource planning and management, HR policies and initiatives and promotion. Project Appraisal Committee It examines and makes recommendations to the Board on projects or Capital investment. Health, Safety and Environment Committee The terms of reference includes review of policy, processes and systems on Safety, Health, Environment and Ecology aspects.Financial Management Committee The committee looks upon the matters pertaining to Budget, Delegation of power commercial issues, Forex and Treasury Management, Capital structure, Issue of Securities, Short and long term loans periodical performance review of subsidiaries. Apart from the above committees, the Board from time to time, constitutes Functional committee with specific terms of reference as it may be fit. Meeting of such committees are held as and when the need for discussing the matter concerning the purpose arises.Time schedule for holding the meetings of such committees are finalized in consultation with the committee members. Code of Conduct for Members of the Board and Senior Management: The Company is committed to conducting business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations. A code of conduct, evolved in line with the industry practices was adopted by the board on the recommendations of Audit and Ethics committee. All members of the board and senior management have compliance with the code of conduct for the year.Subsidiary Monitoring Framework: All subsidiaries of the company are Board managed with their boards having their rights and obligations to manage such companies in the best interest of their stakeholders. As a majority shareholder, the company nominates its representatives on the boards of subsidiary company and monitors the performance of company periodically. Disclosures The Company has not entered into any material financial or commercial transactions with the Directors or the Management or their relatives or the companies and firms, etc. in which they are either directly or through their relatives interested as Directors and/or Partners except with certain PSUs, where the Directors are Directors without the required shareholdings. The company has compiled with applicable rules and the requirement of regulatory authorities on capital market and no penalties or strictures were imposed on the company. Means of Communication: Quarterly or Annual results News release, Presentation Website Annual Report Guidelines on Corporate Governance by DPE: No Presidential Directive has been issued during 2008-09 and the last three years.No items of expenditure have been debited in books of accounts, which are not for the purpose of business. No expenses, which are personal in nature, have been incurred for the Board of Directors and top management. The administrative and office expenses were 3. 79% of total expenses during 2008- 09 as against 5. 45% during the previous year. The decrease in 2008-09 is on account of reversal in 2008-09 of excess pay revision arrear provided during 2007- 08 and also provision of additional gratuity in 2007-08 due to increase in the maximum amount of gratuity to Rs. 10 Lakh from Rs. 3. 5 Lakh.