The Public Enterprises Selection Board (PESB), the government’s head-hunter, has picked R Kesavan as the new finance director of state-run oil refiner Hindustan Petroleum Corporation Ltd (HPCL).
The selection of Kesavan, who is with HPCL for 33 years, further dashes the hopes of state-run oil explorer Oil and Natural Gas Corporation Ltd (ONGC) of being recognised as a promoter of HPCL with attendant powers to name directors to the oil refiners board.
Kesavan is currently an executive director (corporate finance) at HPCL and since March 1 has been designated the chief financial officer (CFO) of the company after J Ramaswamy superannuated from the post of finance director and CFO on February 28 this year.
In early 2018, ONGC acquired the 51.11 per cent stake held by the government in HPCL for Rs 36,915 crore.
Read more: ONGC acquires 51.11% stake in HPCL for ₹36,915 crore
More than a year after the deal was signed, ONGC only has a solitary board seat, though it ought to have had and rightfully more in keeping with its majority controlling stake in the refiner. HPCL is yet to recognise ONGC as its promoter. ONGC is shown as a public shareholder with 51.11 per cent stake in its most recent share-holding pattern submitted to the Bombay Stock Exchange in April.
Out of the nine candidates interviewed by PESB on June 17 for the post of finance director, five or more than half were from HPCL including Kesavan while one each were from Mangalore Refinery & Petrochemicals Ltd (a subsidiary of ONGC), Indian Oil Corporation Ltd, Container Corporation of India Ltd and Western Coalfields Ltd. The short-list did not include a candidate from ONGC.
It is customary for a PSU where a director level officer is being interviewed to have half of the short-listed names from that state-run firm to reflect its management control. The short-list of candidates for the post of HPCL finance director thus makes it clear that HPCL has not yielded ground to ONGC in the selection and in recognising ONGC as a promoter.
Besides, the chairman of ONGC, as a result of the company being the holding company of HPCL, should by rules sit on the interview panel to select the directors. For selecting a director of a company where the government or its controlled company has more than 50 per cent stake, a PESB panel holds interview from among shortlisted candidates. The panel is assisted by the Secretary of the administrative ministry concerned and the chairman of the company.
In the case of subsidiaries, the full-time Chairman of the holding company is invited to assist the PESB in the selection of a director, according to guidelines issued by the Department of Personnel. BusinessLine could not independently verify whether the ONGC Chairman and Managing Director Shashi Shanker sat on the interview panel to select the HPCL finance director.
HPCL Chairman and Managing Director M K Surana has retained the title of Chairman and Managing Director despite corporate governance structure require a group having just one chairman and subsidiaries being run by managing directors and CEOs.
ONGC's overseas subsidiary, ONGC Videsh Ltd, is headed by a Managing Director and CEO. Its refinery subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL), which is listed on BSE, too is led by a Managing Director and CEO. ONGC Chairman is the board Chairman of both the companies.
Kesavan’s name will have to be ratified by the ministry of petroleum and natural gas because HPCL continue to be governed by rules framed by the Department of Public Enterprises even after it was acquired by ONGC.