New Delhi, July 1: The financial institutions have relented in the stand-off over Punjab Tractors Ltd (PTL) by agreeing to allow the strategic partner, who will pick up the state government’s stake, to nominate people to the key board-level posts.
The FIs, which hold 45.39 per cent of the equity base in PTL, were earlier opposed to the strategic bidders being allowed to appoint their own nominee as chairman and two key directors, just as the state government had been doing.
Their opposition had stemmed from the fact that the government was selling a small share — 23.49 per cent. Under the provisions of the Companies Act, the stake sale does not allow the new owners to take over these posts when the FIs control a far greater stake.
However, sources said a consensus had now been reached on the entire issue. The Punjab government had earlier sought to amend the company’s article of association to give strategic buyers the power to appoint the chairman and two other directors, but without success.
The existing articles of association provides that the chairman will be the ex-officio industry secretary of the Punjab government and that the two key directors, including the managing director, would be selected by the government.
The FIs in question are Unit Trust of India (UTI), Industrial Development Bank of India (IDBI), General Insurance Company (GIC) and Life Insurance Corporation (LIC).
While the FIs hold a stake of 45.39 per cent, 18.70 per cent is held by the public and 12.42 per cent is held by others. Sources say the end to the impasse means that the disinvestment process at Punjab Tractors will now be on course.