On a Murky Path

Without a chairman since November 2021, PTC India’s future looks uncertain as four independent directors step down over corporate governance issues

▶ IN EARLY DECEMBER, PTC India, a player in the power trading solutions business, faced a crisis when four of its six non-executive independent directors stepped down from the board. At the core of the issue are serious concerns over issues related to governance.

A communiqué sent to the stock exchanges expresses how grave the situation is, with the starting point being PTC India’s subsidiary, PTC Financial Services (PFS). Three independent directors resigned in January 2022 when “the board chose to turn a blind eye to the corporate governance lapses in PFS,” say the outgoing directors in their resignation letters. On the specific issue of PTC, the outgoing board members have stated that their views “are either overlooked or ignored”. Besides, board meetings are called at short notice with agendas not circulated in a timely manner, the outgoing directors say. As things stand, PTC has not had a regular Chairman and MD since Deepak Amitabh stepped down in November 2021.

A week after the spate of resignations, Mohammed Afzal was brought on to the beleaguered company’s board as nominee director of the Ministry of Power. He holds the position of Joint Secretary (Transmission) in the ministry.

PTC is a public-private partnership with the promoter group holding small stakes. As of September 30, four promoters—National Hydroelectric Corporation, Power Finance Corporation, Power Grid Corporation and NTPC—held only 4.05 per cent each. “Obviously, the promoters will not care since the holding is a small blip on their balance sheet,” points out Shriram Subramanian, Founder and Managing Director of InGovern, a proxy advisory firm. Speaking of public shareholders, LIC holds close to 6 per cent, with mutual funds and banks accounting for just over 2 per cent. The list of foreign portfolio investors includes names such as Fidelity Funds, Vanguard Total International and Vanguard Emerging Markets Index that hold 5.26 per cent, 1.16 per cent and 1.08 per cent, respectively, in the company.

So what are the options left at this point for PTC? “The company needs a change in top management and a new active and accountable Board of Directors,” says Subramanian of InGovern. Being a listed company makes it that much more critical that it is done, he adds.

Since January 1, the PTC India stock has shed 17 per cent in value, while the company’s reputation has taken a hit because of the recent happenings. Experts say that with investors’ money at stake, the company needs to act fast to repair its reputation and restore confidence at all levels. But the path seems murky.

According to experts, PTC India needs a change in management and a Board that acts proactively