After over five months, Oil and Natural Gas Corporation (ONGC) has finally got a director appointed on the board of Hindustan Petroleum Corporation Ltd — a firm it had acquired for Rs 36,915 crore.
The Ministry of Petroleum and Natural Gas on June 22, conveyed its consent for the appointment of Pankaj Kumar, Director (Offshore), ONGC as a director on the board of HPCL, according to regulatory filings by HPCL.
For over five months, ONGC had no representative on the board of HPCL — a company in which it owns a 51.11 per cent stake since January 2018.
HPCL for over one-and-a-half years — between January 2018 and August 2019 — did not recognise ONGC as its promoter despite the government selling its entire 51.11 per cent stake in the company to the oil explorer.
It relented only after a rap from market regulator SEBI. ONGC got the right to appoint one director who HPCL called ‘Government Nominee Director (Representative of ONGC)’.
“Pankaj Kumar has been appointed as Government Director on the Board of the company effective June 22, 2022,” HPCL said in the filing.
Officials said ONGC has been nominating one of its directors as the nominee director. Prior to the latest appointment, its last nominee director was Alka Mittal, Director (HR) who was appointed to the HPCL board in April 2021.
In January this year, Mittal was given additional charge of chairman and managing director of ONGC after the retirement of the incumbent. And following the past practice of the company that the chairman could only sit on the board of a subsidiary in the capacity as chairman and not as a director, Mittal resigned from the board of HPCL and Kumar was nominated.
HPCL promptly took note of it. In a filing on January 6, 2022, HPCL said: “Alka Mittal has tendered resignation from the position of the Government Nominee Director (Representative of ONGC) of the company effective January 05, 2022.” Officials said as per rules, Mittal also sent her 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 continue on the HPCL board for “strategic reasons”, they said.
ONGC thereafter approached HPCL for reinstatement but the company said it wanted written instructions from the ministry as it had already accepted Mittal’s resignation and changed its books, officials said, adding while the firms went into letter writing, HPCL’s annual accounts for fiscal 2021-22, were approved without a nominee of its principal promoter.
But now the ministry seems to have had a change of heart and approved the original recommendation of ONGC, i.e. appointment of Kumar as the firm’s representative on the HPCL board.
It is not clear why the ministry changed its stance.
In the initial months of the Rs 36,915-crore buyout, HPCL had refused to recognise ONGC as its promoter. It had ignored directives from the government as well as the Securities and Exchange Board of India (SEBI), forcing the latter to set a deadline of August 13, 2019, and warn of “appropriate action” if it failed. This forced the HPCL management to make amends.
Before the SEBI order, HPCL listed ONGC as a public shareholder in its regulatory filings. The President of India was listed under the promoter/promoter group category with nil shares.
In September 2018, SEBI first advised HPCL to re-file the shareholding pattern to the stock exchanges revising the status of ONGC as ‘promoter’.
In June 2019, the ministry directed HPCL to indicate ‘President of India’ as the promoter of HPCL and ONGC also to be added as a promoter below ‘President of India’. These were ignored on the pretext that the company needed clarifications from multiple agencies, officials said.
In an August 6, 2019 letter, SEBI again advised HPCL to re-file the shareholding pattern to the stock exchanges for all quarters since the acquisition of shares by ONGC, while revising the status of ONGC as a ‘promoter’, by August 13, 2019, failing which appropriate action will be initiated as per SEBI Act.
HPCL made amends thereafter.