MUMBAI: A battle is brewing between promoters of Raipur-based Vaswani Industries and its public shareholders. A bunch of Vaswani's shareholders, owning around 11% stake in the company, have called for an extraordinary general meeting on January 23 to remove the founders from its board.
Promoters own roughly 52% in the company. The shareholders include MGF Growth Research & Investment, Decent Financial Services, Meenaben Shah, Padmaben Shah and Rajendra Jain, who have sought the removal of Ravi Vaswani, the managing director and the founder of the company, and appointment of their representative Jayshree Gangurde in his place.
They will also demand the replacement of Pramod Vaswani, whole-time director and founder, with Ashwin Kumar Jain in the EGM. This announcement was made in an exchange filing, but Vaswani said the shareholders did not disclose the reason behind the proposal.
In its response in the exchange filing, Vaswani said the step by shareholders is an obvious harm to the interest of the company and appears to be an act of hostility to forcibly takeover the management in the company from the majority group.
None of the shareholders mentioned in the filing could be reached for comment. A top Vaswani official said the shareholders have not stated any reason for this move. The promoters are taking necessary legal steps to address the same, he adds.
It is very rare for shareholders of Indian companies to call for replacement of managing directors, that too the promoter, said Shriram Subramanian, managing director, InGovern Research Services, which advises institutional investors on voting strategies on specific resolutions.
In corporate India, we hope that institutional investors -mutual funds, insurance companies, commercial banks - take cognisance of this provision in the Companies Act and place a resolution for changes in management, even removal of promoter directors, of errant companies. This will go along way in enhancing activism, said Subramanian.
Vaswani Industries was listed on the bourses in October 2011, over five months after its public issue closed. Sebi had withheld its listing after it received about several complaints from investors alleging irregularities in the company's initial public offering.
Source: Economic Times