PTC India said on January 21 that it has set up an internal committee to investigate the allegations made by three independent directors of its subsidiary PTC India Financial Services, who resigned citing lapses in corporate governance and compliance. However, the management has questioned the intent of the resigning board members.
Kamlesh Shivji Vikamsey, Thomas Mathew T and Santosh B Nayar resigned on January 19, alleging lapses in governance and compliance by the management of PTC India Financial. Rajib Kumar Mishra, chairman of PTC India, refuted the allegations made by the independent directors yet again.
Also read: PTC India Financial sinks 16% over corporate governance issues
“We are looking at it from 360 degree; it will be a lengthy on. Many things are incorrect, there are many factual mistakes in the letter. So we are looking at it from all sides and not ruling out anything. We would like to improve upon our system and procedure. But if it has been done just to make allegations, we will simply say that this is an intent to malign the reputation of the company,” said Rajib Kumar Mishra, chairman of PTC India.
The resignation of the three independent directors also brought to light that former Chairman Deepak Amitabh had raised concerns over the corporate governance practices of the company in a board meeting on August 5.
“He (Amitabh) was heading this organization for nine years. I think he is the best person to tell why there were corporate governance issues,” Mishra said.
In a press conference held on Friday to clear the air around the allegations made by the independent directors, both PTC India and PTC India Financial Services raised questions about the “factual errors” in the allegations and the timing of the coordinated resignations that cite instances from an older period.
A fourth director, Rakesh Kacker, had also written to the management of the company highlighting lapses in corporate governance earlier. His tenure on the board ended on December 31.
“All the independent directors were very much involved in the decision making process for five issues that they have mentioned. Now suddenly on one fine day they feel that these operational issues are of very serious nature. It is the moral responsibility of these independent directors to have pointed it out and got it cleared in meetings which they were a part of. It appears that it's an afterthought. Now when they were trying to leave the organization, they pull the cat out of their bag,” Mishra said.
PTC India, formerly known as Power Trading Corporation of India, holds a 65 percent stake in PTC India Financial Services. State run-power sector companies NTPC, Power Grid Corporation of India, Power Finance Corporation and NHPC together own a 16.2 percent stake in PTC India.
Shares of both companies plummeted for a second consecutive session on Friday after the news of the resignation. PTC India shares fell over 6%, and PTC India Financial fell 5%.
Course Correction
The management of PTC India and PTC India Financial said it expects the probe committee to complete its report in a month. It will also fill the board positions with new independent directors.
“We will be filling the position which became vacant after the resignation. We are open to get some experts also who can be added in future but right now the priority is to meet our regulatory requirements,” Mishra said.
The allegations of lapses at PTC India Financial include stalling the appointment of a CFO appointed by the board, failure to disclose the forensic report of a loan account related to NSL Nagapatnam Power and Infratech, and alteration of loan conditions without prior approvals.
Commenting on the directors’ allegation that the company did not disclose the forensic report of a loan account related to NSL Nagapatnam Power and Infratech, the management said that it was following the due process and the report will be tabled in the board meeting.
The directors also alleged that PTC India Financial’s Managing Director and Chief Executive Officer Pawan Singh did not allow “Mr Ratnesh,” to take over the position and function of director finance and chief financial officer, even after the board had approved it.
“We have constituted a third party inquiry and it is an independent inquiry which has submitted its report. We will put it up with the board of PTC and if required to the PFS board also. Once the board clears it, we will be in a position to give more details of the findings of this report,” Mishra said commenting on the allegation regarding the appointment.
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