He spent Rs 36,915 crore to acquire a majority stake in the company. But to get its sole appointed director to the HPCL board, ONGC has to work hard with the paperwork.
For more than five months now, Oil and Natural Gas Corporation (ONGC) has had no representative on the board of directors of Hindustan Petroleum Corporation Ltd – a company in which it has held a 51.11% stake since January 2018. HPCL , under its new chairman Pushp Kumar Joshi is however trying to resolve the situation, senior officials said.
HPCL for over a year and a half – between January 2018 and August 2019 – did not recognize ONGC as its developer despite the government selling its entire 51.11% stake in the company to the explorer tanker.
He only relented after a rap from market regulator SEBI. ONGC obtained the right to appoint an administrator whom HPCL called “the government-appointed administrator (NGOC representative)”.
Officials said that since then, the CGSB has appointed one of its directors as director-designate. Its last appointed director was Alka Mittal, Director (HR) who was appointed to the HPCL Board in April 2021.
In January this year, Mittal was given the additional charge of chairman and CEO of ONGC following the incumbent’s retirement. And consistent with the company’s past practice that the chairman could only serve on a subsidiary’s board as chairman and not as a director, Mittal resigned from the HPCL board and another director has been appointed.
HPCL quickly took notice. In a January 6, 2022 filing, HPCL said, “Alka Mittal has tendered his resignation from the position of Government Appointed Director (CGSB Representative) of the Company effective January 05, 2022.”
Officials said that, in accordance with the rules, Mittal had also sent his resignation from the HPCL board to the Union Ministry of Petroleum and Natural Gas – the parent ministry of ONGC and HPCL.
The ministry, however, rejected the resignation and asked Mittal to remain on the HPCL board for “strategic reasons”, they said.
ONGC then approached HPCL for reinstatement, but the company said it wanted written instructions from the ministry because it had already accepted Mittal’s resignation and amended its books, officials said adding that while the companies began drafting of letters, the annual accounts of HPCL for the financial year 2021-22 have been approved. without an agent of its main promoter.
A senior HPCL official said the company was trying to resolve the issue and that its relationship with ONGC has improved since Joshi took over less than a month ago.
“We have to realize that we are salaried directors on board and not promoter directors,” he said, referring to directors of PSUs appointed as government employees and not as promoters of the company. .
Prior to this change in attitude, HPCL had refused to recognize ONGC as its promoter. He had ignored government guidelines as well as the Securities and Exchange Board of India (SEBI), requiring the latter to set a deadline of August 13, 2019, and to warn of “appropriate action” in the event of failure. This forced HPCL management to make amends.
Prior to the SEBI order, HPCL listed ONGC as a public shareholder in its regulatory filings. The President of India was listed as a promoter/group of promoters with zero shares.
In September 2018, SEBI first advised HPCL to re-file the shareholding scheme with the stock exchanges revising ONGC’s status as a “sponsor”.
In June 2019, the ministry also ordered HPCL to list “President of India” as a promoter of HPCL and ONGC also to be added as a promoter under “President of India”. These were ignored on the grounds that the company needed clarification from multiple agencies, officials said.
In a letter dated August 6, 2019, SEBI again advised HPCL to refile the shareholding scheme for all quarters since the acquisition of shares by ONGC, while revising the status of ONGC in as a “promoter”, by August 13. 2019, failing which appropriate measures will be taken in accordance with the SEBI law.
HPCL later made amends.
Although the promoter tag does not bring any specific privileges to ONGC, the absence of the tag keeps it clear of insider trading regulations as it receives the full agenda for every meeting of the HPCL’s Board of Directors and may be aware of price-sensitive information.
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