The Centre has withdrawn the criteria asking listed central public sector undertakings (CPSEs) to increase their share price over the BSE Sectoral Index. In the revised memorandum of understanding (MoU) guidelines for 2022-23 (FY23) released on Thursday, the Department of Public Enterprises has instead sought to benchmark CPSEs, based on the performance of the top/bottom 25 companies on the S-P BSE 500 Index in order of market capitalisation (m-cap). Business Standard had reported on September 26 quoting anonymous CPSE officials who said that the target to improve share price could tantamount to stock price manipulation and was aimed at helping the government in amassing high disinvestment receipts if they opted for minority stake sales. The criteria have been replaced by ‘total return to shareholder’ which includes parameters like appreciation in stock value, dividends paid, redemption of bonus preference shares, dividend on bonus preference shares, redemption of bonus debentures, and interest on bonus debentures.

Under the criteria ‘share price improvement over sectoral index on annual basis’, the earlier MoU for FY23 released in March this year had said daily improvement/decline in share price will be added for all trading days in the financial year to arrive at annual achievement by CPSEs for this parameter. Citing an example, the earlier MoU had said if improvement in m-cap of a CPSE (over previous day) is 5 per cent and improvement in the BSE Sectoral Index (over previous day) is 4 per cent, the CPSE’s improvement will be considered 1 percentage point (5-4) over the index for that day and vice versa.

Among other key criteria, the MoU has now assigned 2 marks out of 100 for procurement from the Government eMarketplace (GeM) portal as percentage of total procurement.

Earlier, the failure to procure from GeM portal had a negative marking (minus 2).

This holds importance as the government aims for 100 per cent procurement through GeM portal by the end of the current financial year. The earlier provision of rewarding CPSEs with 3 marks for completing 90 per cent of their capital expenditure by the end of the third quarter of the financial year has been done away with.

The revised MoU has also decreased marks allocated to achieving export and import targets from 5 to 4 marks each.

The revised MoU assigns 5 marks for acceptance or rejection of goods and services by CPSEs through the Trade Receivables Discounting System (TReDS) portal within a stipulated time.

TReDS is an institutional mechanism set up to facilitate the discounting of invoices for MSMEs from corporate buyers through multiple financiers.

This is for effective use of TReDS portal in timely payment to MSE vendors of CPSEs in line with the MSMEs Development Act, 2006. “This parameter is for CPSEs to ensure that after delivery of goods or rendering of services, the decision on acceptance/rejection of goods and respective bills/invoices will be taken within 15 days of delivery of goods/rendering of services,” added the MoU. Last month, Finance Minister Nirmala Sitharaman admitted that the central departments and state-owned enterprises are not making payments to MSMEs on time.