New Delhi
Crisis-ridden PTC India Financial Services (PFS), subsidiary of India’s largest power trading company PTC India, has lurched into another major problem, as it has not been able to report its Q4 and FY24 results.
The reporting deadline ended on Thursday.
The company’s inability to report its results is reportedly owing to the refusal by its three independent directors (IDs) to recommend the same. Sources told businessline that the IDs’ action was prompted by the statutory auditor refusing to drop a qualification against them for accepting honorarium from PFS against the rules. Sources said the Board’s Audit Committee (AC) was pressurising the Auditor to remove the qualification, which was not obliged.
The three IDs are former Department of Public Enterprises Secretary Seema Bahuguna, former MD and CEO of Corporation Bank PV Paravathi and former Power Finance Corporation Director (Finance) N B Gupta.
When contacted, Bahuguna said the Audit Committee of PFS met on May 20 and 25 to recommend financial results of the company to the Board. After the adjournment of the board meeting on May 20, 2024, PFS informed BSE, “Standalone and Consolidated Financial Results for the fourth quarter and year ended March 31, 2024, could not be approved by the Board due to certain actionables desired by the Board/Audit Committee from the management.”
On honorarium payment, Bahuguna said, “It is true that the IDs were paid by the management for participating in meetings of selection committees. As soon as the auditors brought to our notice that the company had not done the required compliances while releasing this payment, we immediately refunded the full amount within the time limit prescribed under the Company’s Act. I would also like to clarify that there were several issues which needed further deliberation. We are still working with the management to ensure that the accounts are completed within the prescribed time lines.”
businessline also reached out to PFS, Paravathi and Gupta. They did not respond till the time of the story going to the press.
This is the second time that PFS is facing issues with its IDs. In January 2022, three IDs resigned alleging serious corporate governance issues at the systemically important non-banking financial company (NBFC). Following which SEBI directed PFS to resolve corporate governance issues.
Fresh trouble
The Board meetings, which were scheduled on May 20, 2024 and again on May 25, were adjourned without any decision. “This is due to IDs insisting to drop the qualification,” said sources.
“Auditor pointed out in the independent report that three IDS received ₹4.40 lakh each as honorarium. This is against Provisions 185 and 197 of the Companies Act, 2013. No pecuniary benefits other than sitting fee is admissible for IDs for board and committee meetings,” another source explained.
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Section 197 prescribes that the maximum ceiling for payment of managerial remuneration by a public company to its managing director, whole-time director and manager shall not exceed 11 per cent of net profit of the company in that financial year.
Section 185 mandates that no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by any director of company, or of a company which is its holding company or any partner or relative of any such director.