The divestment of Punjab Tractors Ltd has hit a roadblock with financial institutions refusing to accept the Punjab government's request to amend the article of association and handing over the power to appoint the chairman and two key directors to the successful bidder. The FIs hold around 46 per cent in PTL.

The interest among bidders, who are vying for a management control, is likely to wane in the absence of the power to appoint the honchos.

The existing AoA provides that the chairman will be the ex-officio industry secretary of the Punjab government and that the two key directors, including the managing director, will be selected by the government.

The government's 23.5 per cent stake in the company is held through the Punjab State Industrial Development Corporation Ltd.

The FIs, however, want the right to select the top brass to be vested with the board. "With as much as 46 per cent stake in the company we want the board to have the power of selection and not the bidder who will have around 23.5 per cent stake," a top FI source said.

"We want a fair representation on the board and would accept any person selected by the board as the chairman and managing director, along with the other directors," the source said.

On the issue of participating in the open offer after the government hands over the stake, the FI said, "Our decision to part with PTL stake will be a purely commercial decision. If we feel the price is fair enough we might offload our stake."

LIC holds around 16.24 per cent in PTL, while UTI holds another 13.91 per cent. GIC's stake in close to 8 per cent and IDBI holds another 7.29 per cent.