PTC India CMD Mishra's appointment backed by PSU promoters despite regulatory scrutiny

PTC India EGM on June 28.

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Shareholders of PTC India (PTC) approved the appointment of Rajib Kumar Mishra as the chairman and managing director despite the regulatory scrutiny of the process followed for his selection and his role in alleged corporate governance lapses in subsidiary PTC India Financial Services (PFS).

At the extraordinary general meeting (EGM) of PTC held on June 28, the resolution for Mishra’s appointment received a 100 percent vote from the promoter group, which includes  NTPC, Power Grid Corporation of India (PGCIL), Power Finance Corporation (PFC), and NHPC.

Of the votes received, around 32% of public institutions and 35% of the ‘public-others’ category, which includes the retail shareholders, were against this resolution.

Proxy adviser InGovern Research Services and Stakeholders Empowerment Services (SES) had advised the shareholders to vote against this resolution as Mishra’s role has been under the scanner after three independent directors of PFS, where he is a chairman, resigned.

In a similarly worded letter in January 2022, the three independent directors alleged corporate governance issues including bypassing the board in certain decisions and changing the terms and conditions of loans.

On June 28, shareholders also passed resolutions relating to the appointment of Rashmi Verma, Jayant Dasgupta, and Narendra Kumar as independent directors, and Mahendra Kumar Gupta and Ravisankar Ganesan as non-executive nominee directors.

The EGM took place the day after the Registrar of Companies (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 pertaining to issues raised by the independent directors in January 2022.

Separately, the capital market regulator Securities and Exchange Board of India (SEBI) has held Mishra and PFS MD & CEO Pawan Singh responsible for the corporate governance lapses in PFS. Singh was sent on leave last week in line with a Reserve Bank of India directive.

Mishra is also being questioned by SEBI for the irregularities in his appointment at the top job. Moneycontrol reported exclusively that the capital market regulator sent a letter to Mishra and PTC’s company secretary on June 22, asking about possible irregularities related to the CMD’s appointment, collusion between Mishra and Pawan Singh, managing director and chief executive officer of PFS, and issues pertaining to corporate governance.

PTC, which was set up in 1999 as a government-initiated public-private partnership, is partially owned by state run-power companies – NTPC, Power Grid Corporation of India (PGCIL), Power Finance Corporation (PFC), and NHPC each owns a 4.05 percent stake. Life Insurance Corporation owns 5.96 percent and Damodar Valley Corporation owns 3.38 percent in PTC.

Mishra took over as acting chairman of PTC in November 2021, after former CMD Deepak Amitabh quit. PTC informed bourses on March 29 that its board has approved the appointment of Mishra, which will now be put up for shareholders' approval. NTPC, PGCIL, PFC, and NHPC have nominee directors on the board of PTC.

In a show-cause notice to Mishra and Singh on May 8, SEBI held both responsible for their role in the lapses in corporate governance in PFS. SEBI said that Mishra had not acted in the interest of shareholders of PFS and failed in his “prime responsibility” of letting the board function effectively and in discharging his duties.