HPCL Refuses To Recognise ONGC As Promoter, 18 Months After Merger
For six quarters in a row since ONGC-HPCL merger was finalised in January, HPCL has identifed the President of India as promoter.
Hindustan Petroleum Corporation Ltd. has for the last one-and-half-years refused to recognise its majority shareholder Oil And Natural Gas Corporation Ltd. as a promoter, according to stock exchange filing.
The ONGC-HPCL merger was completed in January 2018 after ONGC bought the govenrment’s entire 51.11 percent stake in HPCL for Rs 36,915 crore.
Following this, HPCL became an ONGC subsidiary. HPCL's management, however, has so far refused to recognise ONGC as its promoter.
In a July 21 regulatory filing declaring its shareholding pattern for the quarter ended June 30, 2019, HPCL listed ONGC as "public shareholder" and not as its promoter. Just like the previous five quarterly filings, HPCL listed "President of India" as promoter with "zero" percent shareholding. ONGC was listed as "public shareholder", owning 77.88 crore shares, or 51.11 percent shareholding of the company.
An email sent to an HPCL spokesperson seeking comment on the matter remained unanswered till the time of publishing this story.
While HPCL remained unrelenting, oil minister Dharmendra Pradhan in written replies to questions in Parliament listed the company as an ONGC subsidiary.
The government too has been treating HPCL as an ONGC subsidiary. On June 17, Its headhunter Public Enterprises Selection Board called ONGC Chairman and Managing Director Shashi Shanker to assist in selecting HPCL’s new director of finance.
Till now, HPCL Chairman and Managing Director Mukesh K Surana would sit on PESB interview panels for selecting directors.
HPCL Director (Finance) J Ramaswamy retired on Feb. 28. PSEB has selected R Kesavan, an executive director in HPCL, to replace him.
For selecting the director of a company, where the government or government-run company has more than 50 percent stake, PESB interviews shortlisted candidates. The panel is assisted by the secretary of the administrative ministry and the chairman of the company concerned.
The Department of Personnel guidelines states that "in the case of subsidiaries, the full-time chairman of the holding company is invited to assist the board".
Going by these guidelines, the ONGC chairman was invited to sit on the interview panel to select HPCL Director (Finance).
According to people familiar with the matter, the government had earlier this year asked HPCL to add ONGC as its co-promoter but the oil marketing company sought to delay it by seeking further clarifications.
While the promoter tag does not bring any specific privileges to ONGC, a lack of it keeps it out of insider trading regulations as it gets full agenda of every board meeting of HPCL and can be aware of price-sensitive information.
According to the Securities and Exchange Board of India's rules, the entity that owns the controlling stake should be listed as promoter even if it was not the original promoter of the company.
When Indian Oil Corporation Ltd. had bought the government's stake in fuel retailer IBP Co. Ltd, it was listed as the latter's promoter in every instance after the deal. The same was the case when Indian Oil acquired a majority stake in Chennai Petroleum Corporation Ltd.
Since acquiring a majority stake in HPCL, ONGC has only been able to appoint one director to that firm's board.
On Monday, HPCL shares rose 0.62 percent to Rs 293.80 apiece on the BSE while ONGC’s gained 1.70 percent to Rs 146.55 each. The benchmark Sensex shed 0.80 percent to end the day at 38,031.13 points.