Govt Rethinks Plan To Sell Stake In PTC India

In 2022, the power ministry approved a proposal for stake sale by four promoter public sector undertaking (PSUs)—NTPC, NHPC, Power Grid Corp. and PFC—which have a 16.22% stake in the listed firm, following which the PSUs had appointed ICICI Securities as the merchant banker for the proposed transaction. Each of the four promoters hold 4.05% in the listed entity.

Although the government wanted to exit the company amid allegations of corporate misgovernance in PTC, and its subsidiary PTC India Financial Services (PFS), now the rethink is being guided by the rationale that the government’s stake provides credibility to the firm, and its NBFC arm, and would keep them viable. The Centre’s stake would also help the NBFC borrow at cheaper rates, thereby supporting India’s energy transition roadmap.

“The jury is still out on it. Initially, we had thought that the government has no business to be in it, so the CPSUs may come out. But then, it was considered that the fact that the government stake is there, gives it credibility. So, this (the stake sale) may hit the viability of PTC. That has set us thinking. We are thinking about it," Union power minister Raj Kumar Singh told Mint.

Initially, only NTPC planned to sell its shares in the company and appointed ICICI Securities as the banker. Following the move, the power ministry suggested that the four promoters exit the firm together.

In line with directive, the four state-run companies decided to exit in one go to maximize value.

In its FY22 annual report, NTPC said the Centre’s approval was required for selling its shares in PTC India as the company was formed by a directive of the government. On 16 December, Mint reported that the four promoter PSUs plan to offload their stake in PTC India.

According to people in the know, Nasdaq-listed ReNew, Greenko and Torrent Power were among parties vying for the promoter stake in the company.

Queries sent to spokespeople for Power Grid, PFC, NHPC, NTPC, PTC India, ReNew, Greenko and Torrent Power remained unanswered till press time, while a spokesperson for ICICI Securities declined to comment on the matter.

The latest push for share sale gains significance as it comes amid a slew of resignations from the PTC board.

The plans to put the stakes of state-run companies on the block came amid the resignation of several independent directors from PTC India’s board, alleging mismanagement and lapses in corporate governance at the company and its subsidiary PTC India Financial Services (PFS).

Late last year, four independent directors—former diplomat Preeti Saran, BSE chairman S.S. Mundra, former secretary in the finance ministry Sushama Nath, and Jayant Gokhale, founder of accounting firm Gokhale and Sathe—quit the board.

In her resignation letter, Nath said since the issues in its subsidiary PFS surfaced earlier this year, governance norms have deteriorated in PTC as well.

“Specifically in relation to the report submitted by chairman RMC (risk management committee) on the matters raised by three independent directors of PFS in their resignation letters in January 2022, the board of directors of PTC has by a majority decision chosen to turn a blind eye on the corporate governance lapses in PFS," she wrote.

BSE chairman and former RBI deputy governor Mundra alleged that a trend has developed in PTC India where most of the board meetings are called at short notice, and agenda papers circulated at an even shorter deadline to the meeting.

On 8 December 2022, the company denied allegations of misgovernance and non-compliance made by its outgoing independent directors. However, in a clarification filed with the exchanges, the state-run company said none of the board members had raised any such issue over the past six months, choosing to mention them only in the resignation letters.

Regarding concerns raised by independent directors over alleged non-implementation of the risk management committee’s recommendations, the company said the recommended corrective actions have already been taken. It also denied the allegation that meetings were called at short notice.

PTC was formed in 1999 with four state-run entities in the power sector as its promoters. On Thursday, its shares rose 0.5% to close at ₹92.49 on BSE.