State-run Power Finance Corporation (PFC), one of the promoters of PTC India (PTC), is taking necessary action and raising concerns where needed as the latter faces regulatory probe, said Parminder Chopra, who has the additional charge of chairman and managing director (CMD) of the company along with being the director of finance.
Chopra became the first woman to head the non-banking finance company (NBFC) after the government’s headhunter, Public Enterprises Selection Board, recommended her name. She was also a nominee director on the board of PTC until July 23.
PTC has been under the scanner since January 2022, when three of the independent directors of its subsidiary PTC India Financial Services (PFS) resigned citing corporate governance lapses. Separately, the capital market regulator Securities and Exchange Board of India (SEBI) has also questioned the process of the appointment of Rajib Kumar Mishra for the top job.
“If you talk about the stake, it is an insignificant stake, as we own around 4 percent even though we are a promoter. One of our directors is on the board of PTC as a nominee director, and they have been raising questions whenever we receive SEBI notices or any other intimation,” Chopra said in an interview to Moneycontrol.
Promoter group taking necessary action
State run- power sector companies– NTPC, Power Grid Corporation of India, PFC, and NHPC– are the promoters of PTC and each owns 4.05 percent stake in the company.
“We are part of the promoter group. So we have also been receiving these notices. We are taking the necessary action and raising our concerns about the company at the board meeting,” Chopra said.
After the resignations of the independent directors of PFS, PTC management denied all allegations. But following directions from SEBI in 2022, the PTC Risk Management Committee (RMC) was tasked with looking into the issues raised by these resigning independent directors.
The RMC, which was headed by independent director RN Mishra, included Copra and two other independent directors– Preeti Saran and Jayant Gokhale. The RMC report, which was discussed in a board meeting on March 31, 2022, left the board divided as it allegedly underplayed the concerns of PFS independent directors over lapses in corporate governance.
Subsequently, PTC too saw four of its six non-executive independent directors resign from the board in December 2022. The independent directors — Sushama Nath, Jayant Gokhale, Subhash S Mundra, and Preeti Saran — resigned raising concerns over governance issues and the “cavalier attitude” of the management towards independent directors. They also said that RMC did not adhere to the norms of corporate governance, their recommendations were not implemented, and that the parent company did not take any corrective action.
Under the scanner
“I don't think that, in any case, the PTC chairman can influence the promoter director in any of the meetings. So the RMC has given clear-cut opinions, which were part of the RMC report, and the full report has been shared with everyone. The opinions of all members have been clearly mentioned in it, and there is no question of any directors being influenced,” Chopra said.
The PFS matter is being probed by SEBI, Reserve Bank of India (RBI), and the Ministry of Corporate Affairs (MCA). SEBI issued a show-cause notice in May to PTC Chairman and Managing Director Mishra, who is also the chairman of PFS, and the Managing Director and Chief Executive Officer of PFS Pawan Singh, in this connection. The regulator held both responsible for the lapses in corporate governance in the company.
The MCA’s Registrar of Companies has found PFS and Singh in violation of The Companies Act, 2013, and penalised both entities in three separate adjudication orders. Singh was sent on leave last month after a directive from the RBI.
Mishra is also under the scanner for alleged irregularities in his appointment at the top job. Moneycontrol had exclusively reported on June 27 that SEBI sent a letter to him and PTC on June 22, asking about possible irregularities in the appointment, and about corporate governance issues in both parent company and the subsidiary.
Moneycontrol exclusively reported on July 13 that PTC board has set up a sub-committee comprising three directors to look into alleged irregularities in the appointment after SEBI questioned the process.
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