Saturday, October 1, 2022

Govt directs HPCL to acknowledge ONGC as promoter

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New Delhi: State-refiner Hindustan Petroleum Corp Ltd (HPCL) has been asked by the government to identify Oil and Natural Gas Corp (ONGC) in regulatory filings to end the year-long slugfest involving the state-run refiner and the country’s biggest explorer. This has resulted in the obstruction of synergy gains from the Rs 37,000-crore acquisition deal, a source with knowledge of the matter said. The management of HPCL has frequently blocked ONGC’s efforts to display authority. Moreover, the ONGC chief cannot preside over the HPCL board or intervene in its matters. The sour relationship between the two firms has also resulted in the HPCL-MRPL merger plans being pushed to the backburner, sources said.

ONGC a public shareholder

Hindustan Petroleum, in public filings of its shareholding pattern, identifies ONGC, with 51.11 percent stake, as a public shareholder, although it acknowledges the President of India with zero stake as the promoter. Nearly a year ago, ONGC agreed to purchase the government’s majority stake in HPCL. By not being classified as a promoter, ONGC is in danger of losing the regulatory exemption from making an open offer to other HPCL’s other shareholders, sources said, as per the deal. It could cost ONGC close to Rs 19,000 crore for an additional 26 percent stake in HPCL. Moreover, ONGC only has one nominee on the board of HPCL, while its repeated outbursts on the issue of promoter have been ignored by its subsidiary.

Who is a promoter?

As per the Companies Act, 2013, a promoter is someone having control over the company’s affairs, directly or indirectly, be it a shareholder, director or otherwise. ONGC meets this condition of being the HPCL promoter since it is a shareholder with a majority stake and voting rights.

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