EIL asked to appoint 1 more independent director

Engineers India has been asked by an inter-ministerial panel to appoint one more independent director on the Board to meet Sebi norms so that government can go ahead with its 10 per cent stake sale in the firm.

The 11-member Inter-Ministerial Group (IMG), headed by Disinvestment Secretary Ravi Mathur, has asked the Petroleum Ministry and the Department of Public Enterprises to ensure that there are requisite number of non-official directors on the EIL's Board.

"The appointment of independent directors on the Board of EIL was crucial for disinvestment in the company as the Draft Red Herring Prospectus (DRHP) cannot be filed with the Sebi without having requisite number of independent directors on the board of the company," an official told PTI.

EIL, under the Petroleum Ministry, provides engineering and related technical services for petroleum refineries and other industrial projects.

The government plans to disinvest 10 per cent stake, or 3.36 crore shares of EIL through Further Public Offering (FPO) in the domestic market. The stake sale could fetch around Rs 600 crore to the exchequer at the current market price.

As per the norms of market regulator Securities and Exchange Board of India (Sebi), EIL would need to appoint one more independent director on its board from the present five.

At present, there are 13 directors, including the Chairman-and-Managing Director, on EIL's Board. Of that, 5 are independent directors.

Sebi guidelines make it mandatory for a company to appoint at least 50 per cent of the total Board strength as independent directors when they have an executive Chairman.

The Department of Disinvestment has already invited applications from merchant bankers for managing the stake sale of the company. The DoD is likely to appoint at least three bankers for the stake sale.

Up to 5 per cent of the public offering will be reserved for the employees of the company.

Government currently holds 80.40 per cent in EIL, a 'Miniratna' status PSU. In 2010, the government had divested 10 per cent stake through an FPO in EIL.

The paid-up equity capital of the company, as on March 31, 2012 was Rs 168.47 crore.