What you need to know about Power Grid's big boss changes

Here's a candidate recommended by PESB.

As per a recent media report, the Public Enterprises Selection Board (PESB) has recommended Mr. I S Jha [Director (Projects)], for the post of chairman and managing director (CMD) of Power Grid (PWGR) upon the superannuation of Mr. R.N. Nayak (current CMD) in September 2015.

According to a research note from Nomura, further, the report states that Mr. Jha was among the eight candidates interviewed by PESB and order for the appointment, to be announced by ‘Appointments Committee of Cabinet’, is likely to come by August after necessary scrutiny on PESB’s recommended candidate.

Nomura noted that the recommendation is a positive outcome as the risk of ‘execution impetus’ ebbing under a new leadership would be considerably mitigated.

Here's more from Nomura:

Over the past 3-4 years, PWGR’s cohesive senior management, under the leadership of its current CMD (Mr. Nayak), has instilled the DNA of unrelenting execution focus in the organisation, which is reflected in the robust growth in earnings and asset base, and as the GoI appoints a successor to Mr Nayak, we believe that continuity of execution focus under the new leadership will be critical to gauge PWGR’s ability to deliver growth in the longer term.

In this context, we view PESB’s recommendation of Mr. I.S. Jha [Director (Projects)] for being appointed as the next CMD of PWGR as a positive outcome as the risk of ‘execution impetus’ ebbing under a new leadership would be considerably mitigated.

We note that Mr. Jha has been in PWGR since August 1991 and has been on the Board of Directors of the company since September 2009. As Director (Projects) he has very much been at the heart of 1.7x rise in PWGR’s asset base (GFA) over the past five years to USD19bn in FY15F.

Mr. Jha would have a stint of 3.75yrs upon his appointment as the CMD (while the appointment would likely be for five years, he would superannuate ie, reach the retirement age of 60yrs in June 2019), a reasonable duration, in our view.

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