The Ministry of Power has not advised the public sector companies (PSU) who own significant stake in PTC India (PTC) on the regulatory scrutiny, but the ministry won't protect anyone if the allegations are proven, Secretary Alok Kumar told Moneycontrol.
PTC’s non-banking financial services subsidiary PTC India Financial (PFS) is being probed by the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), and the Registrar of Companies (ROC) after three of its independent directors resigned in January 2022. They cited lapses in corporate governance including bypassing the board in certain decisions and changing the terms and conditions of loans.
Action taken
“The power ministry will not protect anybody if someone is found doing wrong after investigations. But right now, it’s all allegations which are being investigated by the most able authorities,” Kumar said.
The ROC found the non-banking finance company PFS and its Managing Director and Chief Executive Officer Pawan Singh in violation of The Companies Act, 2013 and penalised both entities in three separate adjudication orders. These matters pertain to issues raised by the independent directors in January 2022.
On June 27, Moneycontrol was the first to report that ROC had found PTC India Financial Services Ltd and its Managing Director and Chief Executive Officer Pawan Singh in violation of The Companies Act, 2013 and penalised both entities in three separate adjudication orders. Separately, Sebi has held Mishra and PFS MD & CEO Pawan Singh responsible for the corporate governance lapses in PFS in a show-cause notice sent to both on May 8. Singh was sent on leave as directed by the RBI, the company had informed bourses on June 22.
“The concerned authorities have already taken action against PFS’ MD Pawan Singh by penalising him. And now I believe he has been sent on leave or something as well. So, wherever and whenever allegations against anybody get proven, action is also taken,” Kumar said.
'Not in shareholders' interest'PTC, which was set up in 1999 as a government initiated public-private partnership, is partially owned by state run-power companies, which also have a nominee director on the board; these include – NTPC, Power Grid Corporation of India (PGCIL), Power Finance Corporation (PFC), and NHPC, who each own a 4.05 percent stake. Other state-run shareholders include Life Insurance Corporation (5.96 percent) and Damodar Valley Corporation (3.38 percent).
SEBI’s show cause notice in the PFS matter stated that Chairman Mishra did not act in shareholder interest. Moneycontrol also reported exclusively that SEBI has sent another letter to Mishra asking for clarification on possible irregularities in his appointment and alleged collusion with PFS’ Singh. Proxy adviser InGovern Research Services and Stakeholders Empowerment Services (SES) had advised the shareholders of PTC to vote against the resolution for appointment of Mishra as CMD in the extraordinary general meeting on June 28. But PSU promoters voted 100% in support of the resolution.
“As Secretary, Power, of Government of India, I can clearly tell that we have not asked any PSU, including NTPC, to vote against or for Mishra,” said Kumar.
“The PSUs who have stakes in PTC have their own directors in the Board of PTC. These PSUs and their directors have knowledge and are conscious about the issue. They, and in fact PTC’s Board, are accountable for whatever decision they take. The Ministry of power is not involved in the matter. Sebi and others are already investigating the case, so we should let them do their job,” he said.
Kumar retires from his post on June 30. Pankaj Agrawal, Administrative Service (IAS) officer from the 1992 batch, who is currently serving as additional secretary and director general (acquisition) in the defence ministry, will take over as Power Secretary effective July 1.
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