The government on Thursday appointed a senior Power Ministry official on the board of PTC India, the controlling company of PTC India Financial Services (PFS), which courted controversy last week after three of its independent directors resigned from the board alleging corporate governance issues. PFS has to submit report to SEBI on the same by February 22.

“Raghuraj Madhav Rajendran has been appointed as nominee director of Ministry of Power on the board of PTC India with effect from January 27, 2022,” PTC India said in a regulatory filing to stock exchanges. 

Rajendran is posted as a joint secretary in the Power Ministry. He has no relationship with any of the PTC directors and is not debarred from holding the office of director by virtue of any order of Securities and Exchange Board of India (SEBI) or any other such authority, the power trading firm added.

The promoter group of PTC India, comprising of NHPC, NTPC, Power Grid and PFC, collectively hold 16.22 per cent stake. Besides, Damodar Valley Corp holds 3.38 per cent. State-run insurance giant LIC is also a shareholder. PTC India holds controlling stake (65 per cent) in PFS.

The appointment of a senior government official on the power trading firm’s board assumes importance as its subsidiary, PFS has been directed by markets regulator SEBI to address corporate governance issues raised by the independent directors who have resigned from the non-banking financial company (NBFC). On January 22, SEBI directed PFS to submit a report on action taken in a month.

The crisis in PFS started after three independent directors — Kamlesh Shivji Vikamsey, Santosh B Nayar and Thomas Mathew T — resigned on January 19 alleging corporate governance issues at the systemically important non-deposit taking NBFC. This escalated further after Rakesh Kacker, an independent director on PTC India’s board, resigned on January 21 citing corporate governance issues. 

Kacker, a retired IAS officer, was an independent director with PTC from April 2017 and with PFS from October 2019. His term as independent director at PFS ended on December 31, 2021. He also emphasised on the issues raised by the three independent directors.

PFS was scheduled to hold a Board meeting on January22 to select independent directors, but could not do so as it did not have the mandated quorum to hold a board meeting nor the go ahead from the regulator.

Major issues

Among the major issues raised by the three independent directors is the delay in appointment of Ratnesh as CFO in PFS. They claimed that PFS MD & CEO, Pawan Singh did not allow Ratnesh to join as Director (Finance) and CFO despite board approval. Another charge is the two years delay (November 2018 to December 2020) in submitting the forensic audit report (FAR) of NSL Nagapatnam Power and Infratech, which took a loan of ₹125 crore from PFS.

Insolvency proceedings were initiated against NSL Nagapatnam and the promoter company of NSL made a one-time settlement (OTS) offer to PFS in March 2020. But when the FAR came to light, PFS’s audit committee recommended that the matter should be reported to Reserve Bank of India (RBI) as suspected fraud and the board wanted to defer the decision on OTS till RBI responded. 

The independent directors also raised concerns over issues raised on PFS by former PTC India CMD Deepak Amitabh in a board meeting in August 5, 2021. Amitabh resigned on personal grounds with effect from November 5, 2021 after staying with the firm for 18 years. He has also raised the issue of reporting of NSL Nagapatnam to RBI.

The independent directors also raised concerns over the change in some loan conditions of Patel Darah-Jhalawar Highway (PDJHPL) without the board being informed. The company took a term loan of ₹150 crore for four laning of Darah-Jhalawar-Teendhar section of NH-12 in Rajasthan. The board had asked the company to submit a report on the issue by October 31, 2021, which was not done by the PFS management. 

The independent directors said they repeatedly voiced their concerns and sought information through e-mails but were disappointed as these communications were “blatantly ignored.”