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HPCL snubbed on refusing to accept ONGC as promoter

By IndianMandarins- 25 Jun 2019
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Hindustan Petroleum Corp Ltd (HPCL), which has for the last 15 months refused to recognize its majority shareholder ONGC as its promoter, stands snubbed for not having accepted ONGC as its promoter even 15 months after the latter acquired the controlling stake in the former.

 

On June 17, the Public Enterprises Selection Board (PESB) called ONGC Chairman and Managing Director Shashi Shanker to assist in selecting the new Director (Finance) of HPCL. The participation of the ONGC CMD, instead of HPCL CMD, in the selection of the director finance, could in a way end all the wrangling over the promoter issue.

 

May it be noted that in regulatory filings for five consecutive quarters, HPCL listed "President of India" as its promoter with "zero" percent shareholding. ONGC was listed as "public shareholder", owning "77.88 crores" shares or "51.11 percent" shareholding of the company.

 

HPCL Director (Finance) J Ramaswamy retired on February 28 and interviews for the post held by PESB on June 17 selected R Kesavan, who currently is an executive director in HPCL.

 

It is pointed out that Coal India Ltd's governance structure, which the HPCL management has so often cited, clearly provides for the holding company chairman to sit on the panel for selecting directors of subsidiary companies.

 

Coal India Ltd is a holding company and has seven subsidiaries. The board of each of the subsidiaries is headed by a chairman and Coal India too has a chairman and managing director to head the board. But on PESB interview panels to select a director or chairman of subsidiary companies, Coal India CMD is invited.

 

It is said even though the government had earlier this year asked HPCL to add ONGC as its co-promoter, the oil refining company sought to delay it by seeking further clarifications.

 

While the promoter tag does not bring any specific privileges to ONGC, a lack of it keeps it out of insider trading regulations as it gets full agenda of every board meeting of HPCL and can be aware of price sensitive information.

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