Petronet to pay 1% of profit as commission to directors

Petronet LNG Ltd, India’s biggest gas importer, has sought shareholders’ approval to continue payment of commission to its directors, capped at 1 per cent of annual profits, for another five years from financial year 2026-27 to 2030-31.

The proposal, contained in the notice for the company’s forthcoming general meeting, seeks approval for distribution of a sum not exceeding 1 per cent per annum of profits calculated under Section 198 of the Companies Act, 2013, among the directors in such amounts and proportions as may be decided by the board from time to time.

Shareholders had last approved the commission arrangement at the annual general meeting held on September 28, 2021, for FY22 to FY26. The earlier approvals for similar payments were granted in 2007, 2011 and 2016, according to the shareholder notice.

The company said the proposed continuation was being sought in view of its “healthy financial position”.

For the fiscal year ended March 31, 2026, Petronet paid its CEO Akshay Kumar Singh and other directors a commission of Rs 26.5 lakh each, according to the annual report. They had received a commission of Rs 25.5 lakh in the previous fiscal year.

The commission took Singh’s total remuneration in 2025-26 to Rs 3.64 crore, up from Rs 3.03 crore in the previous financial year.

Independent directors on the company board also got Rs 10 lakh each as commission on profit, besides the sitting fees. They were paid Rs 9.75 lakh commission in the previous 2024-25 fiscal.

The actual commission paid to whole-time directors, including the managing director and CEO, and independent directors has remained well below the statutory ceiling, according to the company.

In FY26, whole-time directors, including the MD and CEO, were eligible for a maximum commission of Rs 79.5 lakh, while independent directors were eligible for Rs 55 lakh, taking the combined maximum to Rs 134.5 lakh, it said.

The company said the commission, as a percentage of profit before tax, was “marginal” and within the overall limits prescribed under the Companies Act, 2013.

Petronet had reported a net profit of Rs 3,843 crore on a revenue of Rs 43,495 crore in 2025-26. This compared with Rs 3,926 crore profit on a revenue of Rs 50,980 crore in the previous 2024-25 fiscal year.

Section 197 of the Companies Act governs managerial remuneration, while its provisions cap remuneration payable to non-executive directors, including independent directors, at 1 per cent of net profits where the company has a managing or whole-time director or manager.

Singh last year got a 15-month extension till May 2027 as the managing director and chief executive officer of the country’s biggest liquefied natural gas importer.

Singh, 65, who took over as Petronet CEO on February 1, 2020, for an initial five-year term, will now superannuate on May 12, 2027.

While the superannuation age in public sector companies is 60 years, Petronet, though headed by the government’s top bureaucrat in the Union Ministry of Petroleum and Natural Gas, is registered as a private limited company.

Petronet is not under any government watchdog like CAG or CVC and is beyond the purview of RTI. Its board executives enjoy higher remuneration than PSUs and also retire at the age of 65 years.

A process to find a replacement for Singh has already started.

Appointments to the board are made by a search-cum-selection committee of the board. It is made up of representatives of lead shareholders in the company, an independent director and an outside expert.

State-owned Indian Oil Corporation (IOC), GAIL (India) Ltd, Oil and Natural Gas Corp (ONGC) and Bharat Petroleum Corporation Ltd (BPCL) hold a 12.5 per cent stake each in the company. The heads of the four blue-chip oil firms, who sit on the board of Petronet, superannuate at the age of 60 years.

A mechanical engineer from MIT, Muzaffarpur (Bihar), and a post-graduate from South Gujarat University, Singh came to Petronet from Indian Oil Corporation (IOC), where he was Director (Pipelines). Prior to joining the IOC board in 2018, Singh was an executive director at state-owned gas utility GAIL India Ltd.