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Since 1st March, 1999
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Cloud over new term of HPL boss
the hot seat

Joint venture terms say Bengal will appoint the chairman and TCG the MD

Bhowmik was unanimously chosen MD in March 2005

Relation between Bhowmik and TCG got strained over IOC share allotment

TCG needs FI backing to overrule Bhowmik reappointment

CLB had said the composition of the HPL board should not be changed until the government sells its holding to TCG

Calcutta, March 11: When the Haldia Petrochemicals Ltd (HPL) board meets on March 20 at Taj Palace, Delhi, it may turn out to be a stormy affair. The 16-member board will have to grapple with a contentious issue: the re-appointment of Swapan Bhowmik as the managing director for a fresh term. Bhowmik’s present term ends on March 29.

The board will be meeting at a time when a fresh dispute has broken out between HPL’s two principal promoters — The Chatterjee Group (TCG) of Purnendu Chatterjee and the Bengal government. After a protracted battle before the Company Law Board (CLB), they are now locked in litigation before Calcutta High Court as they fight for control of the company.

Sources in the know said TCG might oppose the re-appointment of Bhowmik as MD, while the Bengal government is keen to ensure that he stays on. When contacted, both shareholders declined to comment.

“There is a court case going on. I will not comment,” Sabyasachi Sen, commerce and industry secretary and a member on the board of HPL, said. A TCG spokesperson also said he had no comment to offer. “The board has to take a view,” he said.

TCG had contested Bhowmik’s appointment before the CLB, saying it was invalid on technical grounds. But CLB did not entertain the TCG argument and declined to interfere with his appointment. The state government, on the other hand, is in favour of a board-managed company.

According to the agreement between TCG and the Bengal government, the post of the chairman goes to the state, while TCG appoints the MD. It is part of a comprehensive pact that said Chatterjee would have management control in HPL. As a corollary to that, the MD would be nominated by them. However, the Bengal government revoked that pact on the ground that Chatterjee had not kept his commitments.

Bhowmik joined in August 2001 as president, polymer, and then become CEO after Richard Saldanha quit as MD. He rose to the rank of managing director in March 2005. His appointment was unanimous then. However, relations between Bhowmik and TCG have apparently become strained over the allotment of shares to Indian Oil Corporation (IOC).

Observers said TCG might find it tough to force a change unless the financial institution nominees do not back him. Both TCG and the government have four members each on the board. HPL is expected to announce its best ever performance shortly with a record profit and turnover, and the financial institutions might find little to complain against the management, which has scripted the turnaround of HPL.

In its order, the CLB had also said the composition of the board should not be changed until the government sells its holding to TCG. However, the state government has moved court against the order. The courts may now have to decide whether a member can be replaced at the end of his term. Observers say the re-appointment may open a new front in the legal confrontation between the already sparring shareholders.

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