Harsh Vardhan Lodha Ousted from Directorship of 5 MP Birla Cos; Ministry Okays Admin Panel Move
Harsh Vardhan Lodha has been ousted from the Boards of five investment companies of MP Birla group after an order by the Calcutta High Court restrained him from holding offices.
 
The Union corporate affairs ministry had on Wednesday approved and accepted the cessation of directorship of Lodha as recorded by the Board of Directors of these companies headed by the judicial member of the court-appointed APL Committee.
 
The decision to remove Lodha from the Boards of East India Investment, Gwalior Webbing, Baroda Agents and Trading Co, The Punjab Produce & Trading Co, and Punjab Produce Holdings, the oldest of which was founded in 1937, was based on the decision of the single bench of the Calcutta High Court dated 18 September 2020 which was approved by the division bench of the said high court on 1 October 2020. The ministry website, which lists directors of companies, no longer shows Lodha's name as Board member of these companies.
 
On November 5, Lodha had chaired the Board meeting of Birla Corporation and thereafter other three cable companies on 9th and 10th November  as self-appointed Chairman, sidestepping the decisions of the High Court and the APL Committee, the panel overseeing the administration of the estate which holds majority stake and controlling interest in the group companies, which had barred him from acting as such following the High Court order.
 
The extended Birla family, which is contesting a will of late Priyamvada Devi Birla produced by a former auditor of the group companies naming him as the sole inheritor of the Rs5,000 crore business empire (presently claimed to be valued at over Rs25,000 crore), said it will initiate contempt of court proceedings against Mr Lodha, the concerned companies and their Directors.
 
"Lodha has continuously misinterpreted court orders and flouted the APL Committee decisions to cling on to the Boards of MP Birla Group companies wrongfully. We will move the court to restrain him from further action in contravention of the decisions of the court as well as the APL Committee," said a spokesperson for the Birlas.
 
On September 18, 2020, Justice Sahidullah Munshi of Calcutta High Court had ordered Lodha be restrained from holding office in any of the MP Birla Group entities during the pendency of the suit involving the contested will of Priyamvada Birla. This judgement by the single judge was challenged by Lodhas before the division bench which not only declined to stay the ouster of Lodha from the entities of the MP Birla Group, but also held that the order of the single bench was neither a perverse decision nor it was not in the best interest of the estate.
 
Sources said that Lodha's attorney deliberately interpreted the order to limit the purview of the court order only to alleged miniscule shareholding of the estate, ignoring the well-established corporate practice and commonly prevailing structure of control through holding of shares directly and indirectly by way of cross, chain and interlinked shareholding among the promoter group constituents.
 
"Thus, the way paved for him to chair the Board meetings of the group companies is illegal and violative of the court orders. The profitability of the MP Birla Group companies has eroded steadily, and in no way is comparable to their peers," sources said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    SAT Quashes SEBI Order Directing Prabhat Dairy To Deposit Rs1,292 Crore; Asks for a Deposit of Rs500 Crore
    Last week, the Securities Appellate Tribunal (SAT) quashed an order issued by Securities and Exchange Board of India (SEBI) directing Prabhat Dairy to deposit over Rs1,292 crore. SEBI has also been asked to process the delisting application of Prabhat Dairy and pass appropriate orders within six weeks.
     
    The SAT order states "The direction of the WTM to deposit a sum of Rs1,292.46 crore is wholly arbitrary and has been passed without any application of mind". WTM is a whole-time member of SEBI, in this case Prabhat Dairy Ltd.
     
    In an ex-parte order on 20th October, SEBI had directed Prabhat Dairy to deposit Rs1292 crore proceeds from the sale of its key business in an escrow account of a nationalised bank pending a forensic audit. It had also hauled up the company’s management for not cooperating with the forensic auditor Grant Thornton. The SEBI interim order came after reports which accused the company of misuse and wrongful diversion of funds raised through the sale of its core dairy business for Rs1,700 crore to French multinational Groupe Lactalis in April 2019.
     
    Earlier in July, SEBI had appointed Grant Thornton LLP as forensic auditor to check facts and the financials of the firm and the financial statements for the financial years FY18-19 and FY19-20.
     
    In January 2019, Prabhat Dairy said that its board has approved the sale of the firm's shareholding in its wholly-owned subsidiary Sunfresh Agro Industries Pvt. Ltd to Tirumala Milk Products Pvt Ltd for a total consideration of almost Rs1,227 crore. It also approved the sale and transfer of its dairy product business for about Rs473 crore. The company shared its intention to distribute the net proceeds of the sale transactions (around Rs1,200 crore) with shareholders and even set up a committee to advise on this.
     
    Subsequently in September 2019, Prabhat Dairy stated that promoters intend to acquire 49.9% stake (currently being held by public shareholders) and delist the company from the Exchanges. 
     
    Prabhat Dairy appealed to the SAT after the market regulator’s interim order to deposit the money. Prabhat argued that the amount left to be distributed after meeting tax liabilities, indemnity, transaction cost, debt outstanding was about Rs854.40 crore. Of this, 50% (Rs427 crore) will go to the promoters and roughly Rs427 crore would go to minority shareholders comprising 49.9%. 
     
    SAT said SEBI’s order “would cripple the company and bring it to down to its knees which is neither in the interest of the company nor in the interest of its shareholders.” The tribunal added that the SEBI order was “not just as there was no specific finding on diversion of funds.”
     
    Instead, SAT asked Prabhat Dairy to deposit Rs500 crore in an escrow account within 10 days. Simultaneously the firm has been directed to share all the required information with the forensic auditor Grant Thornton. The forensic auditor will have to submit its findings within one month.
     
    The counsel for SEBI submitted that the directions SEBI had passed were “solely to protect the interest of the shareholders of the company.” He added the company had indicated that it would distribute substantial portion of the sale proceeds to shareholders but was yet to do so. The firm had even failed to declare its March quarter results before the stipulated time which led to the inference that there was something fishy. The counsel also said that it needs to be noted that the distribution of the sale consideration to shareholders should not be mixed with the consideration of payment to be made under the delisting application. The sale proceeds have to be distributed by the company, while the promoter is required to pay separately for delisting. 
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    COMMENTS

    ssbh.dceo

    1 week ago

    EVERYBODY IS LEGALLY CORRECT EXCEPT THE CUSTOMER/DEPOSITOR/SHAREHOLDER. ULTIMATE SUFFERER.

    SEBI Asks NSE To Increase its IPF Corpus to Rs1,500 Crore from Rs594 Crore at Present
    On Wednesday, the National Stock Exchange (NSE) admitted that the Securities and Exchange Board of India (SEBI) has directed the Exchange to conduct a review and to ascertain the adequacy of its investor protection fund (IPF), disclose the corpus on its website and update it on a monthly basis. 
     
    SEBI has also asked NSE to increase the size of its IPF corpus to Rs1,500 crores in order to protect the interests of investors in the light of the recent broker defaults. The adequacy of the IPF corpus will be reviewed on a half-yearly basis and incremental contributions will be made to the IPF, if required. 
     
    Accordingly, NSE has announced that it will enhance the total corpus to Rs1,200 crores by 26 November 2020. Further, Rs300 crore will be maintained as a reserve fund to be transferred to Investors Protection Fund Trust (IPFT) to meet any shortfall in IPF.
     
    Moneylife has been pointing out that the National Stock Exchange (NSE), which churns out 85%-90% higher volumes, has a significantly smaller IPF of Rs594.12 crore compared to that of the Bombay Stock Exchange’s (BSE) Rs784.24 crore as on 31 March 2020. Annual profits and earnings of both BSE and NSE are way higher.
     
    Subsequently, last month, SEBI Chairman Ajay Tyagi acknowledged that IPF with stock exchanges is 'woefully insufficient’ while speaking at the CII's financial market summit. He had said that the market regulator would take corrective measures soon. 
     
    In the past couple of years, broker defaults have been on the rise and the IPF corpus would be grossly inadequate if every investor has to be paid. This is one of the main reasons both stock exchanges delay declaring brokers as defaulters, and have a cap of Rs25 lakh for each investor. Clients are allowed to claim money from stock exchanges only after a broker is officially declared a defaulter.
     
    The statement from NSE says “In order to enhance the effectiveness of the Investor Protection Fund (IPF) and to improve the investor experience while making claims against defaulting Trading Members, SEBI has advised Exchange to operationalise a detailed Standard Operating Procedure (SOP).
     
    "The SOP inter alia covers procedures and timelines for obtaining information from investors, processing investor claims, review of claims and timeline for declaration of a Trading Member as a defaulter. The SOP strengthens existing processes and includes electronic claim submission, pre-filled forms with information as available with the Exchange, claim processing policy, review by independent auditors etc. The SOP is being operationalized to significantly reduce the timelines for making payments to the investors in case of Trading Member defaults.”
     
    NSE has stated that a detailed policy for evaluating investor claims is available on NSE's website. All eligible investor claims of a defaulting trading member will be paid as per the policy without any aggregate limit per trading member subject to a maximum of Rs25 lakh per client. 
     
    Meanwhile, BSE in a similar statement, said that it had received a letter from SEBI, dated 13th November “to enhance the effectiveness of IPF as the regulator has decided to revamp the grievance redressal mechanism at stock exchanges with regard to clients of defaulting trading members.” The BSE, in its statement, added that SEBI had asked it to implement the prescribed Standard Operating Procedure (SOP) for processing of investors’ claims and a timeline for declaration of defaulters.
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    COMMENTS

    tillan2k

    1 week ago

    d not rein in brokers theyare all Govt Son in laws ( Jamai Rajas) like it was shown in Punjab , Haryana, Rajasthan . shows what constitutes political funding dalali pei Dalali

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