In mid-December, electricity-generation heavyweights NTPC Ltd and NHPC Ltd, transmission major Power Grid Corporation, and financier Power Finance Corporation reportedly reportedly Livemint PSUs hire ICICI Securities to sell stake in PTC India Read more  decided to sell their stakes in PTC India—the country’s largest power-trading company. 

These four companies—among the most important state-run players in India’s power sector—make up the promoter group in PTC India with a ~16% stake. Nudging them towards the exit door reportedly is the ministry of power.

 It’s an odd spectacle that the government is telling key state-run companies to get rid of their stake in another key entity—that it controls indirectly. What gives?

Allegations of major lapses in corporate governance at PTC India seem to have forced the hands of the powers that be. “The government is caught between a rock and a hard place,” says a person who was associated with the company until recently. They and others The Ken spoke to declined to be named because they did not want to comment publicly on the matter. 

“It’s not a usual divestment. The government wants to exit rather than get caught in the quicksand,” they add. 

In a filing filing BSE Clarification by PTC India Read more  with the stock exchanges on 19 December, PTC India said it’s not aware of any such stake sale by the promoter companies. But investors seem to be voting with their feet—the stock is down ~8% since the news broke. Taking the fall to more than 30% since January, when the troubles began. 

It all started with PTC India Financial Services (PFS)—a non-banking financial company (NBFC) in which PTC India holds a 65% stake. PFS is categorised as a “systemically important” NBFC by the Reserve Bank of India. 

A long saga of independent director resignations, allegations of misgovernance, adverse forensic-audit findings, defiant refutals and counter-allegations—centred around PFS and its chief executive (CEO) and managing director (MD) Pawan Singh—has now come to haunt PTC India. In a reversal of a line from William Shakespeare’s The Merchant of Venice: “The [alleged] sins of the child are to be laid on the father.” And if PTC India’s independent directors are to be believed, the father, too, sinned. 

Ironically, PTC India tried to sell its stake in PFS a few years ago without success. Had this gone through, it would have been saved the blushes. But now, it may be too late.