Petronet to pay directors up to 1% of profit as commission

Petronet LNG Ltd, India's biggest gas importer, has sought shareholders' approval to continue paying commission to its directors, capped at 1% of annual profits, for another five years from FY27 to FY31.

The proposal, included in the notice for the company's forthcoming general meeting, seeks approval to distribute a sum not exceeding 1% 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. Similar approvals were granted in 2007, 2011 and 2016, according to the shareholder notice.


Petronet said the continuation of the commission was being proposed in view of its "healthy financial position".

For the year ended March 31, 2026, Petronet paid CEO Akshay Kumar Singh and other whole-time directors a commission of Rs 26.5 lakh each, compared with Rs 25.5 lakh in FY25, according to the company's annual report.

The commission took Singh's total remuneration for FY26 to Rs 3.64 crore, up from Rs 3.03 crore in the previous fiscal year.

Independent directors received Rs 10 lakh each as commission on profit in FY26, in addition to sitting fees. Their commission stood at Rs 9.75 lakh each in FY25.

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

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. The combined maximum commission was Rs 134.5 lakh.

Petronet said the commission, as a percentage of profit before tax, was "marginal" and within the overall limits prescribed under the Companies Act, 2013.

The company reported a net profit of Rs 3,843 crore on revenue of Rs 43,495 crore in FY26, compared with a profit of Rs 3,926 crore on revenue of Rs 50,980 crore in FY25.

Section 197 of the Companies Act governs managerial remuneration and caps remuneration payable to non-executive directors, including independent directors, at 1% of net profits where a company has a managing or whole-time director or manager.

Singh, 65, was given a 15-month extension last year until May 2027 as managing director and chief executive officer of the country's biggest liquefied natural gas importer.

He took charge as Petronet CEO on February 1, 2020, for an initial five-year term and will now superannuate on May 12, 2027.

While the superannuation age in public sector companies is 60, 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 the purview of government watchdogs such as the CAG or CVC and is beyond the scope of the RTI. Its board executives receive higher remuneration than those at PSUs and retire at 65.

The process to find Singh's replacement has already begun.

Appointments to Petronet's board are made by a search-cum-selection committee comprising representatives of the company's lead shareholders, an independent director and an outside expert.

State-owned Indian Oil Corporation (IOC), GAIL (India) Ltd, Oil and Natural Gas Corporation (ONGC) and Bharat Petroleum Corporation Ltd (BPCL) each hold a 12.5% stake in Petronet. The heads of the four oil firms, who also sit on Petronet's board, superannuate at the age of 60.

A mechanical engineer from MIT, Muzaffarpur, and a postgraduate from South Gujarat University, Singh joined Petronet from IOC, where he was Director (Pipelines). Before joining the IOC board in 2018, he was an executive director at state-owned gas utility GAIL India Ltd.

(With PTI inputs)