Indian Oil Giants Fined for Board Composition Non-Compliance

India’s leading oil firms, including Indian Oil, BPCL, and GAIL, have faced repeated fines from stock exchanges BSE and NSE for failing to meet board composition requirements. These penalties, imposed for the fifth consecutive quarter, stem from the companies’ inability to maintain the mandated number of independent and women directors on their boards.

The fines, imposed for the April-June quarter of 2024, have been levied on major oil refining and marketing companies such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Oil India Ltd (OIL), GAIL (India) Ltd, and Mangalore Refinery and Petrochemicals Ltd (MRPL).

Despite the fines, these companies have argued that the appointment of directors is solely under the government’s purview and beyond their control. Listing norms mandate a balanced ratio of independent directors and require at least one woman director on the board.

Indian Oil Corporation (IOC), for instance, was fined Rs 5,36,900 each by BSE and NSE for non-compliance with board composition regulations. The company highlighted that the government’s authority over director appointments prevented it from fulfilling the requirements.

BPCL, HPCL, GAIL, OIL, and MRPL have also faced similar fines. These companies have consistently struggled to meet the listing norms since April last year, leading to repeated penalties.

The persistent fines underscore the governance challenges faced by these state-run oil firms. Despite efforts to address the issue through communications with the relevant ministry, the companies have been unable to maintain the mandated board composition. This ongoing non-compliance has resulted in significant financial penalties for these major players in the Indian oil industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.