New Delhi, Feb 4: Hindustan Petroleum Corp Ltd (HPCL) Chairman and Managing Director Mukesh Kumar Surana will continue to hold his designation if the firm’s new promoter, ONGC, is to follow the Coal India Ltd model for governance of subsidiaries.
ONGC last week completed the acquisition of the government’s 51.11 per cent stake in HPCL for Rs 369.15 billion (Rs 36,915 crore).
HPCL is now a subsidiary of ONGC and it has been speculated that Surana will lose the Chairman’s tag and would be reduced to Managing Director who would report to ONGC Chairman and Managing Director.
Industry sources said this situation can be completely avoided if ONGC follows the Coal India Ltd’s (CIL) governance model.
CIL, the world’s largest coal producer, is the holding company whose board is headed by a Chairman and Managing Director.
It has eight subsidiaries like Eastern Coalfields Ltd and Bharat Coking Coal Ltd, all of whom have a board headed by Chairman and Managing Director.
The Chairman and Managing Directors of the subsidiaries report to CIL head.
Sources said if this model is followed, Surana will continue as Chairman and Managing Director of HPCL who would report to ONGC head Shashi Shanker.
Prior to the stake sale, the government made it clear that HPCL would continue to be a central public sector enterprise (CPSE), retaining its separate identity and brand and will be independently run by its board.
The alternate governance model has been thrown just as a large section in ONGC feels that HPCL should be governed on lines of the company’s other subsidiaries like ONGC Videsh Ltd, which have an independent board and a Managing Director or CEO as heads.