BPCL stares at top vacancies as it looks for pvt investors

CMD D Rajkumar and director (refineries) R Ramachandran to retire on Aug 31

As state-run Bharat Petroleum Corporation (BPCL) inches closer to disinvestment, the company is staring at vacant board positions.

Two of the top executives in the board — Chairman and Managing Director (CMD) D Rajkumar and Director (Refineries) R Ramachandran — are set to retire on August 31.

The Public Enterprises Selection Board (PESB) had come out with job notifications for filling both the posts in August 2019.

However, the headhunting process was cancelled early this year as the company was initially expected to go for divestment in the fourth quarter of 2019-20 or the first quarter of 2020-21.

With the Covid-19 pandemic and the subsequent lockdown delaying the divestment process, the company is likely to land in a spot now with a question on whether it will go headless amid its quest for private investors.

Government sources indicated that the two executives could be given an extension as the company is going through a crucial period. A petroleum ministry spokesperson did not respond to questions from Business Standard.

If not an extension, the government may even consider appointing an interim chairman, like in the case of Air India in 2017.

At that time, Rajiv Bansal was appointed for the first time as head of the national carrier for three months, when Ashwani Lohani took charge of the Indian Railways.

Currently, Director (Human Resources) K Padmakar is the seniormost among existing board members of BPCL.

Usually, extensions are given to company heads at such crucial stages. In 2016, when State Bank of India (SBI) was going through the process of merging five associate banks and Bharatiya Mahila Bank into itself, then chairman Arundhati Bhattacharya had got an extension for around a year.

At the end of July, the government had extended the deadline to submit bids for a 52.98 per cent stake in the country’s second-biggest oil refiner for the third time in a row to September 30. This was following requests from prospective bidders and owing to the Covid-19 pandemic situation.

The company also offered a voluntary retirement scheme to its employees, who are keen to part ways before privatisation.

Based on the current market cap, the value of the government’s stake in BPCL comes to around ~46,694 crore. For investors, around 35.3 million tonnes (mt) of refining capacity, 16,492 retail outlets, and 72 million LPG customers will be on offer.

The Cabinet had approved the sale of the government’s entire 52.98 per cent stake in BPCL in November last year.

Offers seeking expressions of interest (Eois), or bids showing interest in buying the stake, were invited only on March 7.

Initially, the EOI submission deadline was May 2, but on March 31 it was changed to June 13 and then to July 31, before it got finally extended to September 30.

According to the notice, the government’s plan is to sell its entire shareholding in BPCL, comprising 1.15 billion equity shares, with transfer of management control to a strategic buyer. It, however, excludes the company’s 61.65 per cent stake in the Numaligarh Refinery in Assam.

The company’s stake in the refinery is expected to be sold to another public sector undertaking. So far, a consortium of state-run Oil India and Engineers India has shown interest in picking up BPCL’S 48 per cent stake in Numaligarh. The remaining stake would be sold to the government of Assam, to increase the state’s share to 26 per cent in the venture.