PTC India Financial: A Stormy Board Committee Meet Leads To Three Directors Quitting

A routine meeting of the nomination and remuneration committee of the board earlier this month turned into a tumultuous affair and led to the eventual exit of three independent directors at PTC India Financial Services Ltd.

On Sunday, PTC India Financial Services shared the resignation letters of three of its independent directors, Seema Bahuguna, Naveen Bhushan Gupta and PV Bharathi. The letters were all identical, with a similar paragraph as reason for resignation.

"...during the last few months an environment has been created in the company which has made it difficult for me to function in an independent and impartial manner. In this scenario I am feeling constrained in upholding the highest standards of corporate governance expected of me as an Independent Director," all three directors said in their letters.

The company's management on the other hand feigned ignorance about the reasons behind the exits.

"The management is surprised by the unexpected resignation of the aforementioned independent directors and more so because of the reasons cited in their resignation letters. None of them had ever discussed such issues with the board of directors or the management prior to submitting their resignations," PTC India Financial Services said in a notification to the exchanges on Monday.

According to two people in the know, the exits were fomented by a series of events during the NRC meet mentioned above. The NRC consists of Bahuguna, Gupta, Bharathi and Chairman Manoj Kumar Jhawar only.

During the meeting, Jhawar sought to appoint Mini Ipe as an independent director on PTC India Financial Services board, the first of the two people quoted above said. Ipe is also an independent director on the board of parent PTC India Ltd. The agenda for this appointment was shared only a few hours before the board meeting and not seven days prior, as is the norm.

When the opposing directors tried to bring up the issue, they were warned of "consequences", the two people quoted above said.

As such, all three independent directors were set to retire in November, as their term was coming to an end. All three sought to bring a composite resolution, seeking appointment for all four directors, rather than rushing for Ipe's appointment at this moment.

The three directors have long felt that Jhawar's conduct at PTC India Financial Services has been inappropriate, even though he is officially a nominee of the parent company, according to two people quoted above.

The exit of the three independent directors this month is a reminder of corporate governance issues at PTC India Financial Services a few years ago. In 2022, three independent directors namely Santosh B Nayar, Thomas Mathew and Kamlesh Shivji Vikramsey quit the board citing serious corporate concerns.

The exits and the governance issues eventually led to the exit of then chairman Rajib Kumar Mishra and MD & CEO Pawan Singh. Securities and Exchanges Board of India also conducted an investigation into the matter and levied monetary penalties on both.

Both Mishra and Singh were also barred from holding director or managerial roles in a listed company for six months and two years respectively.