ONGC asks HPCL to rectify promoter classification

State-owned Oil and Natural Gas Corp (ONGC) has asked refiner Hindustan Petroleum Corp Ltd (HPCL) to rectify its stock exchange filings to reflect the true promoter after government exit, people with direct knowledge of the development said.

ONGC had in January this year bought the government's entire 51.11 per cent stake in HPCL for Rs 36,915 crore. Post that, HPCL is now a subsidiary of ONGC.

However, HPCL's filing to the stock exchange, the latest being on July 12, still lists 'President of India' as the promoter even with 'zero' per cent shareholding.

ONGC, on the other hand, is listed under 'Public Shareholder'.

Sources said ONGC has written to HPCL management asking it to take steps to rectify the filings to reflect the true promoter of the company.

Since ONGC takeover in January, HPCL has made two stock exchange filings about the shareholding pattern of the company - the first on April 20 and then on July 12. In both, ONGC is shown as the public shareholder and President of India listed as the promoter.

Sources said ONGC feels that HPCL management is bound to take corrective action to reflect the true picture.

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 they were not the original promoters of the company.

When Indian Oil Corporation (IOC) had bought 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 IOC acquired a majority stake in Chennai Petroleum Corp Ltd (CPCL).

While HPCL officials refused to comment on the issue, sources said the issue at hand may be owing to the desire of HPCL management not to be seen as part of ONGC group.

HPCL Chairman and Managing Director M K Surana has retained the title 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. Also 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 head of boards of both the companies.

Since acquiring a majority stake in HPCL, ONGC has only been able to appoint one director to that firm's board.

ONGC has appointed its Director (Finance) Subhash Kumar to HPCL board. He has replaced Sushma Taishete Rath, Joint Secretary in Ministry of Petroleum and Natural Gas.

Prior to this, HPCL had two government nominee directors - Rath and Sandeep Poundrik, Joint Secretary (Refineries) of the oil ministry. After the appointment of Kumar, there remains only one government nominee director on HPCL.