Memorandum of Understanding

for 2017-18

Meeting with CPSEs at Imphal

13th October, 2016

Department of Public Enterprises

Ministry of Heavy Industries & Public Enterprises
Government of India
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 Outline of Presentation

Proposals for MoU Guidelines 2017-18

MoU Negotiation 2016-17
MoU Performance Evaluation 2015-16

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MoU Evaluation
2015-16

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 Self Performance Evaluation Report by CPSEs
CPSEs are required to submit Self evaluation Sheet on the basis
of audited data along with Annual Accounts/Report, other
documentary evidences in support of achievement of financial and
non-financial parameters, etc. within the target date of 30 th
September, 2016;
Documents submitted should be authenticated and conclusive;
Mandatory compliances of various Guidelines and entry of data as
prescribed in MoU guidelines for negative marking ;
Submit actual performance of the CPSE as per the Minutes or MoU
negotiation meeting .
Self evaluation sheet should be approved by Board of the CPSE
and is to be submitted through its Administrative
Ministry/Department by the due date;
Self Evaluation sheet includes, composite score as well as rating,
as calculated by CPSE;

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Documents to be considered in MoU Evaluation 2015-16
The following documents are to be considered by DPE during MoU Evaluation;
Minutes of the MoU Negotiation Meeting;
Signed MoU along with Annexure;
Self Evaluation Sheet submitted by CPSE through Administrative
ministry/Holding CPSE ;
Following documents are required along with the self evaluation sheet ;
Annual Report & Financial statements ;
External Certificates.
Internal certificates signed by appropriate authority
Report on commitment and assistance by Admin ministry/ Department
Besides CPSE should have timely reported to the concerned for :
- Report on compliance of Corporate Governance;
- Compliance of DPE guidelines.
- Compliance of MSME guidelines.
- Compliance of CSR guidelines
- Online entry for PE survey
- Online entry of MoSPI (wherever applicable). 5
 Internal Evaluation by DPE: Financial Parameter
Computation of financial achievements should be as per
definitions given in MoU Guidelines issued by DPE and
Generally Accepted Accounting Principles & rules and as per
Audited Annual Accounts.
Financial achievements should be considered after making
suitable adjustments for specific comment / recommendations
as mentioned in Minutes of Negotiation meeting or MoU. So
that actual performance reported is in line with as considered in
MoU targets.
Example: Adjustment for Plant Shutdown, change in policy during the
year for subsidy calculation, valuation of stock, foreign exchange rate
variation etc.
If there is any inconsistency between signed MoU and Minutes
of Negotiation meeting, generally minutes of negotiation
meeting is considered for Evaluation .

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Internal Evaluation by DPE: Non-Financial Parameter
Non-Financial achievements should be as per the MoU
Guidelines issued by DPE and as mentioned in Minutes or
MoU, so that actual performance reported is in line with as
considered in MoU targets;
To the extent possible, the documents submitted in support of
non-financial achievements should be independently
verifiable and conclusive;
Where achievements are not verifiable from annual
report, CPSE may submit the same by way of resolution
from Board of Directors.
In absence of the supporting documents for Non-financial
achievements, this may entail an automatic downgrading by
at least one notch from the rating claimed by CPSEs in
respect of the parameters for which documentary evidence
have not been submitted to DPE.

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 MoU Evaluation by the IMC
DPE evaluates Self Evaluation score sheets submitted by
CPSEs through Administrative Ministry/Holding CPSE and
the observations and comments will be placed before IMC
members;
IMC may accept the view of CPSE or Ministry or DPE or in
specific circumstances may take decision independently;
Down grading :If the rating of CPSEs gets adversely
affected during internal evaluation (i.e. downgrading of
rating from self assessed score of CPSE and tentative score
calculated by DPE), then opportunity by way of written/oral
re-presentation is given to the concerned CPSE through
administrative Ministry/Department.

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 MoU Evaluation by the IMC Contd ..
Offsets: Non achievement of specific targets by CPSEs for reasons
beyond the control of CPSEs with specific recommendation of the
Administrative ministry, if qualified , will be examined by IMC and shall
be recommended for approval of HPC. The power to permit offsets in
MoU evaluation for reasons beyond the control of the CPSE (force
majeure), is with the High Power Committee on MoU .
Over-achievement of Targets: It has been observed that some
CPSEs under-pitch their projected targets for the coming year during MoU
negotiation meeting so as to plead for soft/low targets. In such cases, during
MoU evaluation DPE/ IMC may call upon the CMD of the CPSE to
explain plausible reasons for such over-achievement due to under pitching
of targets.
Finalization of Score & Rating :IMC shall finalize the
Minutes of Evaluation Meeting and recommend MoU Scores
and Ratings for approval of HPC.
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 Penal Provision (Negative marking) in MoU
Following mandatory compliances and non submission of data
may be penalized up to 1 mark depending on the degree and
seriousness of non-compliance.
Non-compliance of Corporate Governance
Non-Compliance for procurement as prescribed in Public
Procurement policy issued by MSME
Non-Compliance to DPE Guidelines
Non-Compliance to provisions as prescribed in CSR
guidelines
Non-compliance to submission of data for Public
Enterprises (PE) survey,
Non-compliance to submission of data for MOSPI (if
applicable)
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Negative Marking: Corporate Governance in MoU
Evaluation 2015-16
Non-Compliance of Corporate Governance will be penalized
by way of negative marking and MoU score will be increased
in the following manner in accordance with DPE OM
18(8)/2005-GM, dated 22nd June, 2011.
Sl Annual Score Grading Penalty Marks
1 85% and Above Excellent 0
2 75%-84% V. Good 0
3 60%-74% Good 0.5
4 50%-59% Fair 0.5
5 Below 50% Poor 1.0
Status of Negative Marking :
2013-14 : 70
2014-15 : Nil
2015-16 : CG Rating under Finalization
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 Negative Marking : Compliance to Public
Procurement guidelines by MSME

CPSEs have to adhere to 20% procurement from MSE and 4%

from SC/ST MSEs .

Status of Negative Marking :

2013-14 : Not Applicable
2014-15 : Nil
2015-16 : 89 CPSEs have submitted data
44 CPSEs have complied to 20%
out of which only 03 CPSEs complied to
4% of SC/ST entrepreneurs

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Negative Marking : Compliance to DPE guidelines
MoU 2015-16

CPSEs have to give a Certificate regarding implementation of

Guidelines issued by DPE as per OM No.-DPE/14(38)/10-Fin
dated 28th June, 2011.
Non compliance of DPE guidelines on the basis of certificate
submitted will be penalized up to 1 mark .

Status of Negative Marking :

2013-14 : 65
2014-15 : 78
2015-16 : 62 CPSEs have submitted data out of which
28 have reported non compliance

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Negative Marking : Compliance to CSR guidelines

CPSEs have to adhere to provision of CSR guidelines as per

section 135 of the Companies Act 2013 .

Status of Negative Marking :

2013-14 : Not Applicable
2014-15 : Not Applicable
2015-16 : 82 CPSEs have submitted online data

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 Negative Marking : Compliance to Survey Data
Entry for 2015-16

CPSEs have to enter data for PE Survey by 30th September

2016

Status of Negative Marking :

2013-14 : Nil
2014-15 : Nil
2015-16 : 80 CPSEs have not submitted survey data

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 Negative Marking : Compliance to Project
Monitoring Data for 2015-16

CPSEs have to enter online data every month for Rs 150

crores and above projects in OCMS system under MoSPI as
per prescribed timelines .

Status of Negative Marking :

2013-14 : Nil
2014-15 : Nil
2015-16 : Under Compilation

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 Receipt of MoU self evaluation report 2015-16

Particulars No of CPSEs

MoU Signed: 215

- Holding 143
- Subsidiary 72

Self Evaluation Report received:

- Through Admin. ministry 110

- From CPSE 34
 Timelines for MoU 2015-16 Evaluation
CPSEs were to submit self evaluation report latest by 30th
September, 2016 through Administrative Ministry/Department
to DPE;

Alongwith Self Evaluation the CPSEs are required to submit

the following mandatory compliances :
Corporate governance to Management division of DPE;
Compliance to DPE guidelines to Finance division of DPE;
Compliance to CSR guidelines to CSR division of DPE;
Submission of online survey data by 30th September 2016;
Compliance to Public procurement guidelines
issued by MSME to JS or DC (MSME) ;
Submission of online project monitoring data as per
prescribed timelines , if applicable; OCMS system of MoSPI
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Thank You

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