Dheeraj Tiwari & Aman Dhall

NEW DELHI: Time was when paypackets separated the men from the boys, with public sector bosses falling way behind their private sector peers. Now,
CEOs of government-owned companies can give some of their private sector rivals a run for their money.

According to an ET analysis, the chairman & managing director (CMD) of a public sector oil major will now be earning a respectable Rs 5,76,000 per month, thanks to the pay revision bonanza, factoring in a 200% performance-related bonus.

That means a huge leap of 450% over his current monthly salary of Rs 1,02,500 per month and will put him (pay-wise at least) ahead of Infosys chairman NR Narayana Murthy, who earns Rs 4,16,666 per month (as on March 2008). He, however, would still be far behind Wipro chairman Azim H Premji’s monthly salary of Rs 10,95,726.

Even so, this salary hike is a representative picture of the new pay scenario in the higher echelons of the public sector companies. At present, CMDs of public sector undertakings (PSU) draw a basic pay in the range of Rs 27,750-Rs 31,500.

They are also entitled to get 68.8% of basic pay as dearness allowance (DA), 30% house rent allowance (HRA), 30% statutory allowance, 30% fitment benefit and 50% other allowances. So, for example, if a PSU CMD is at the upper-end of the basic salary bracket (Rs 31,500), his total emoluments, excluding the performance-related pay (PRP), will be Rs 97,272.

The PRP is taken from the 5% distributable profit, or profit after tax. And then there is the added sweetner that the salary revision carries, the retrospective effect. This means the CMD of a navratna PSU may get arrears of around Rs 20 lakh as well.

According to the ET analysis based on the figures as on March 31, 2008, the top earning CMDs of PSUs include NTPC’s Ram Sharan Sharma (Rs 1,62,145), Bhel’s K Ravi Kumar (Rs 1,61,285), Gail’s UD Choubey (Rs 1,56,666), IOC’s Sarthak Behuria (Rs 1,40,750), SAIL’s SK Roongta (Rs 1,34,024) and ONGC’s Radhey Shyam Sharma (Rs 1,02,500).

Clearly, while the market capitalisation of some of these PSUs are much higher than private sector companies, the salaries of their CMDs are much lower. Take the whopping difference in the paypackets of the bosses of telecom major Bharti Airtel and ONGC, India’s largest oil & gas company.

Bharti’s market capitalisation is Rs 1,12,411.67 crore, while ONGC’s Rs 1,39,112.27 crore. But there’s a gaping Rs 1,61,90,343 difference in the salaries of their top honchos, RS Sharma’s Rs 1,02,500 per month to Sunil Bharti Mittal’s Rs 1,62,092,843 per month.

In fact, even after the pay revision, Mr Sharma would be far behind some of the other leading private sector bosses, who are not promoters, such as L&T CEO AM Naik, whose remuneration as of March 31, 2008, was Rs 69,93,083

This, despite the fact that PSUs top the list in terms of market capitalisation, with ONGC weighing in at Rs 1,39,112.27 crore, NTPC (Rs 1,13,869.86 crore), Bhel (Rs 58,458.48 crore), Power Grid (Rs 29,146.23 crore), which makes them much larger than some of their private sector competitors such as Reliance Petroleum (Rs 31,477.5 crore), Tata Power (Rs 14,033.77 crore) and L&T (Rs 41,690.74 crore).

After the new pay scales kick in, the basic salary of a PSU CMD will move into the highest end of the new bracket (Rs 80,000-1,25,000), while dearness allowance will be calculated at around 13%. The rest of the allowances will remain the same.

In addition, a profitable PSU can now give up to 200% as PRP. Assuming that a CMD of a blue-chip PSU falls into the highest bracket, his salary without PRP will be Rs 3,16,125, which will go up to Rs 5,76,125, if the company gives 200% as performance pay.

Similarly, for CMDs of miniratna companies, the revised pay will mean an increase of around 200%, even without the 200% PRP, which a CMD of a profitable PSU will be entitled to.