The country’s largest power trading company, PTC India, is facing the wrath of its public sector promoters — NTPC, NHPC, Power Grid Corp and Power Finance Corp (PFC) — who have threatened to completely withdraw their support from the company, saying PTC has lost its "government face".
This has made the power ministry step in and call a meeting of chief executives of all the four promoter firms along with government nominees, including the ministry of external affairs on July 14.
One of the main concerns raised by the promoters is that the PTC management has repeatedly overlooked their concerns while deciding on the options to raise funds. The recent bone of contention is the May 2009 qualified institutional placement (QIP) issue to raise Rs 500 crore. The issue has brought down the promoters’ holding in the company to around 16 per cent.
“With major support by the central PSUs, PTC is considered to be a government’s face,” said the chief executive of a promoting PSU firm, adding that it is because of their support that PTC has been getting substantial business from various states.
He said with the holdings of the public sector promoter firms coming down to 16 per cent, PTC will not be able to show itself as a government-backed company and may face the risk of being taken over. “This is not in the business interest of the company and we have accordingly told the government that it will be difficult for us to maintain support to the company.”
PTC chairman and managing director, T.N. Thakur said he was not aware of any such meeting or development by the power ministry and his company’s promoters. “Nothing has been told to me about the meeting.”
Clarifying the issue Thakur said, “During our first QIP issue, PSU promoters were not keen to infuse any funds and even got the articles of association amended to release them from the obligations for contributing towards the company’s funds requirement.”
However, the power ministry’s agenda circulated for the July 14 meeting clearly says, “The spirit of the creation of the company as per the cabinet approval with the government face has been defeated and the company is in the danger of take over by any private sector.”
In normal course of things, “takeovers do not happen like this,” Thakur said. “If somebody wants to do it, he has to first make its intentions known and a due process has to be followed.”
Besides, some other companies like ICICI Bank, IDFC and IL&FS were initially promoted by government institutions and later became public. “So, why such a hue and cry about the way PTC’s management is taking decisions? This is nothing new and is being done for the growth of the company and the sector.”