IOC, BPCL, GAIL Face Fines For Fifth Quarter Over Board Composition

India's biggest oil firms including Indian Oil, BPCL and gas utility GAIL have been slapped with fines for a record fifth straight quarter for failing to meet listing norms of having the requisite number of independent and women directors on their board.

Stock exchanges BSE and NSE have slapped fines on oil refining and fuel marketing giants Indian Oil Corp., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd., explorer Oil India Ltd., gas utility GAIL (India) Ltd., and refiner Mangalore Refinery and Petrochemicals Ltd. for not meeting the listing requirement in the April-June quarter.

In separate stock exchange filings, the companies detailed the fines imposed by the BSE and NSE for either not having the requisite number of independent directors or the mandated women directors in the quarter ended June 30, 2024 (first quarter of current 2024-25 fiscal year), but were quick to point out that appointment of directors was done by the government and they had no role in it.

The companies had faced fines for the same reason the previous four quarters as well.

Listing norms require companies to have independent directors in the same proportion as executive or functional directors. They are also required to have at least one woman director on the board.

IOC said, BSE and the National Stock Exchange of India Ltd. imposed a fine of Rs 5,36,900 each on the company for non-compliance of Regulation 17(1) of the SEBI (LODR) relating to composition of the Board of Directors during the quarter ended June 30, 2024.

"In response to the notices, Indian Oil vide letter dated Aug 22, 2024 has represented to the BSE and NSE that being a government company, the power to appoint directors (including independent directors) vests with the Ministry of Petroleum and Natural Gas, Government of India and hence the shortfall in independent directors including non-appointment of women independent director on the board of the company during the quarter ended June 30, 2024 was not due to any negligence/default by the company," IOC said.

Stating that IOC should not be held liable to pay the fines and the same should be waived-off, the firm said it regularly takes up with the ministry for appointment of requisite number of directors to ensure compliance with corporate governance norms.

"We would also like to inform that the company had received similar notices from the BSE and NSE in the past imposing fines and waiver requests from the company was considered favorably by the exchanges," it added.

BPCL said it has been imposed with a fine of Rs 2,41,900 each by BSE and NSE for having one independent director short.

Stating that it has no control over the appointment of directors, the firm said it will be approaching BSE Ltd. and NSE for waiver of the fines.

HPCL said it has been fined Rs 5,36,900 each by BSE and NSE. GAIL too faced similar fines.

"This is to submit that the non-compliance with regard to the composition of the board was neither due to any negligence/default by the company nor within the control of GAIL's management and continuous efforts were also made to meet the compliance requirements," it added.

OIL and MRPL too were slapped with Rs 5,36,900 fines each by BSE and NSE.

The oil giants have not been in compliance with the listing norms since April last year and have been slapped with fines every quarter since then.

IOC, HPCL, BPCL, GAIL, OIL and MRPL were slapped with a fine of Rs 5,36,900 each by NSE and BSE for the January-March quarter.

The companies were slapped a fine of Rs 5,42,800 each for the third quarter (October-December 2023). They had faced a similar fine for the second quarter (July-September 2023).