When PACL's big stake went to ex-MD's father-in-law, staffer

Sanjeev Singh Bariana

Chandigarh, November 27

The privatisation of Punjab Alkalies and Chemicals Limited (PACL) is a curious case of managers turning owners overnight. The Punjab Government sold off 100 per cent of its shareholding (equal to 33 per cent of the total paid-up capital) in September 2020 of PACL, which manufactures caustic soda, liquid chlorine, hydrochloric acid and calcium hypochlorite. Soon, two of its top executives came to acquire a big chunk of its equity, landing up among top shareholders of the now-private company — one directly and the other indirectly.

The Tribune has learnt that Durva Infratech, which was allotted 75 lakh shares by PACL after privatisation, is owned by three partners, one of whom, Surja Ram Meel, is the father-in-law of Amit Dhaka, former Managing Director of PACL. Dhaka, an IAS officer of the 2006 batch, is now Administrative Secretary (Planning) in the Punjab Government. Durva Infratech purchased a second-hand captive power plant from Chhattisgarh and it is being alleged by former employees of PACL that this power plant was later sold by Durva to PACL in lieu of 75 lakh shares. Durva Infratech, a Limited Liability Partnership, was set up only in March 2021, thereby strengthening the allegations of the creation of a shell company to get the 75 lakh undivided shares allotted to Surja Ram Meel and his partners.

Former employees of PACL have moved the Punjab and Haryana High Court seeking a “fair and impartial” investigation by a Special Investigation Team (SIT) into the privatisation of PACL, christened Primo Chemicals in December 2022. It has been alleged that the government shareholding was sold for Rs 42 crore, which goes against the grain of valuation of the company’s fixed assets or the real value of its shares, when the company had made Rs 55.8-crore profit in 2018-19. The employees have questioned the allocation of 85 lakh shares of the company as sweat equity to a former marketing head of PACL, Naveen Chopra, who joined the company as a trainee engineer in 1997.

Naveen Chopra is said to have resigned from the company after disinvestment on October 26, 2020. On the same day, he was appointed Managing Director. He was allotted 40 lakh shares as sweat equity with an additional incentive of the tax liability of the equity transaction being borne by the company. On February 10, 2021, another 45 lakh shares were allotted to him.

The “profit-making monopoly” company had 88.86 acres of factory land, a 772-square yard plot in Sector 31, Chandigarh, 2.5-acre housing colony and 8.61-acre new colony and plant and machinery in Ropar. The company made a profit of Rs 55.8 crore in 2018-2019, Rs 8.8 crore in 2019-2020 and Rs 8.24 crore in 2020-2021.The company was not running in losses or draining public money to be subjected to a cut-rate sale, point out former employees.

Talking to The Tribune, former Industries Minister Sunder Sham Arora said, “We did discuss the disinvestment move in the special committee with then Finance Minister Manpreet Badal and Parliamentary Affairs Minister Brahm Mohindra. We were shown that the company was running into big losses. We presented the report to the Cabinet, which decided that PACL be disinvested.”

One of the petitioners says that “we have challenged why the shares were sold off through a private company ‘Resurgent India’ when the rules clearly provide that this should have been done through the Directorate of Public Enterprises and Disinvestment, Punjab.”

The Punjab Vigilance Bureau is also looking into this case: “We are still conducting a preliminary inquiry to check whether hiring ‘Resurgent India’ by PACL before disinvestment was correct. We still have not got all the papers. More facts will come out as more information flows in to us,” says a senior VB official.

A questionnaire about government-appointed top executives acquiring shares in the company directly and indirectly was sent to Dhaka and Chopra. Dhaka has not answered the questionnaire yet. Talking to The Tribune, Naveen Chopra said, “After disinvestment, I was made the MD because of my experience in handling the company. I sought a salary increase to make it at par with the market rates because I was getting very less. Instead of full salary, I was given shares and even that allocation was conditional.” Chopra said, “It was clearly written that 25 per cent of the total equity shares allotted as equity will be released on March 31, 2024. Another 25 per cent of the total equity shares allotted as sweat equity to be released when the company achieves 1.5 times the turnover for the financial year ending March 31, 2021, and an EBITDA (Earnings Before Interest, Tax Depreciation and Amortisation) of 12% of the turnover for such year (in which 2X turnover achieved) or on March 21, 2025, whichever is earlier. With same conditions, 25 per cent of the total equity shares will be allotted as shares on March 31, 2027 and March 31, 2029 with the stipulated increase in the turnovers”.

Another member of the board of directors of Primo Chemicals, requesting anonymity, said, “There is nothing illegal in the way the disinvestment was carried out. Disinvestment for the company in poor finances was in fact attempted three times earlier —- during the Shiromani Akai Dal and Congress governments. The decision to engage Resurgent is absolutely correct as per company laws. As far as questions over former officers becoming part of the new company is concerned, there is nothing illegal in the process.”

Lawyer Binit Sharma, who represents the former employees in the High Court, said, “The beauty of the case is how the company rules have been manipulated to benefit a chosen few. We are looking at the possible involvement of even politicians and have asked the Vigilance Department to go into the details. We expect some replies during our next hearing on November 28.”

Curious case of divestment

• The Tribune has learnt that Durva Infratech, which was allotted 75 lakh shares by PACL after privatisation, is owned by three partners
• One of the partners, Surja Ram Meel, is the father-in-law of Amit Dhaka, former Managing Director of PACL
• 85 lakh shares of PACL were allotted as sweat equity to ex-marketing head Naveen Chopra