It has been almost six months since the high-profile ₹36,915-crore acquisition of Hindustan Petroleum Corporation Ltd (HPCL) by ONGC, but the unease at the top management level still continues.

As the promoter and majority stakeholder in HPCL, ideally the top man at ONGC Shashi Shankar should be accepted as the non-executive Chairman of HPCL. But, an anomaly exists till date.

Reason is simple: the top positions in both the entities are held by individuals of the same rank.

While Mukesh Kumar Surana continues to hold the CMD post in HPCL, Shankar — who is the CMD of ONGC — is yet to gain his position in the refining-cum-retailing major. Shankar holds the top rank in the other two ONGC group entities — ONGC Videsh Ltd and Mangalore Refinery and Petrochemicals Ltd.

An industry official in the know told BusinessLine, “this is the most unfortunate part of the deal. The government should have left the house in order —- which means leave the organisational structure in order by defining the role and responsibility clearly.”

Asked why it was important, as long as the Board of the company was in place, the observer said, “In case of disagreement among the board of directors, whose opinion should prevail?”

Explaining that in a Central public sector undertaking, the board of directors is appointed by the government through a Presidential order, the industry official said, in HPCL there were two government nominees. After the stake buy by ONGC, the government withdrew one and replaced the nominee with Director Finance of the oil giant. But, the topmost post still evades ONGC, as its CMD is yet to be accepted in HPCL.

Officials in the two companies do not rule out the possibility that the problem could be because both the CMDs are of same rank and so the issue of who is going to report. But, this has also resulted in creating an uncertainty at the top-level.

“Whose decision should prevail in case of a disagreement? This is an anomaly which the government should have sorted out before leaving. It is a difficult situation. These are commercial organisations so between the group companies if there are differences, whose opinion should prevail and some other questions remain unanswered,” said an oil industry tracker.

Govt intervention sought

Experts and analysts expressed surprise about the ongoing stand off due to HPCL not accepting ONGC as promoter and felt that government must intervene and direct HPCL to rectify the situation as continued confusion will adversely affect the valuation of ONGC and in turn hurt the government interest, being ONGC majority shareholder.

As far as the transaction is concerned, ONGC has paid the entire money to the government to conclude the deal, as the seller is government and buyer is ONGC. The intent behind this deal was to strengthen CPSEs through consolidation, mergers and acquisitions. By these methods, the CPSE can be integrated across the value chain of an industry.

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