CG of ONGC

Section B Group 10 Corporate Governance of Oil & Natural Gas Corporation Limited (ONGC) Corporate Governance Model in a Public Sector Undertaking

1. 2. 3. 4. 5. 6. 7. 8.

Bitan Banerjee Prakhar Maheshwari Prasoon Agarwal Rajnish Saptorshi Bagchi Satyajeet Shiladityo Bhattacharya Utsav Banerjee

Corporate Governance of Oil & Natural Gas Corporation Limited (ONGC) ONGC is an Indian multinational oil and natural gas company. It has its headquarters in Dehradun, India. It is one of the largest company of its kind in Asia, which produces approximately 72% of India’s crude oil and 48% of its natural gas. ONGC has taken structured initiatives towards Corporate Governance and its practices which evolve around multi-layered checks and balances to ensure transparency. Apart from the mandatory measures required to be implemented as a part of Corporate Governance, ONGC has gone the extra mile in this regard and has implemented the Whistle Blower Policy, Annual Report on working of the Audit & Ethics Committee, MCA Voluntary Guidelines on Corporate Governance, Enterprisewide Risk Management (ERM) framework. The premise of Corporate Governance framework in ONGC: • Adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders including customers, employees and society at large. • A sound system of internal control to mitigate the risks to achievement of business objectives both short term and long term. • Compliance of laws, rules & regulations 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 the stakeholders. • A clear delineation of shareholders' rights. • Accuracy and transparency in disclosures regarding operations, performance, risk and financial position. The Board of Directors The Company is managed by the Board of Directors, which formulates strategies, policies and reviews its performance periodically. The Chairman & Managing Director (CMD) and Six Whole-Time Directors), manage the business of the Company under the overall supervision, control and guidance of the Board.

The Board of Directors has an adequate combination of Executive (Functional) and Non-executive Directors. As on 31st March, 2012, the Board of Directors had 13 members, comprising of 5 Functional Directors and 8 Non-executive Directors nominated by the Government of India. To share the global experience and business strategies, Managing Director, ONGC Videsh Limited (OVL) is a permanent invitee to the meetings of the Board.

Table I: Attendance of Board of Directors (Ref: ONGC Annual Report)

It should be kept in mind: (i) The Company being a PSU, all Directors are appointed/ nominated by the President of India; (ii) Directors do not have any pecuniary relationships or transactions with the Company; (iii) None of the Director is a Member of more than 10 Committees or Chairman of more than 5 Committees, across all the companies in which he is a Director. The company also has the following Board Committees:         

Audit & Ethics Committee Remuneration Committee Shareholders'/ Investors' Grievance Committee Human Resource Management Committee Project Appraisal Committee Health Safety & Environment (HSE) and Sustainable Development Committee Financial Management Committee Committee on Dispute Resolution Other Functional Committees

In conclusion it may be mentioned that many organisations have recognised the excellence in Corporate Governance in ONGC and the following accolades have been conferred on ONGC in recent years: (i). 'ICSI National Award for Excellence in Corporate Governance for 2011'Certificate of Recognition by the Institute of Company Secretaries of India. (ii). 'ICSI National Award for Excellence in Corporate Governance-2010'- by the Institute of Company Secretaries of India; (iii). 'Golden Peacock Global Award' for Corporate Governance by World Council for Corporate Governance, U.K. in the years 2005, 2007,2008 and 2009 (iv). 'Golden Peacock Award' for Excellence in Corporate Social Responsibility in Emerging Economics 2006 by World Council for Corporate Governance, U.K in 2006