The board of directors of CEBBCO took one whole month to accept Ajay Gupta’s and another director, Akhil Awasthi, resignation. What took it so long?
In a new twist to the tale to the Commercial Engineers & Body Builders Co (CEBBCO) saga, the company has released a startling notice to the Bombay Stock Exchange (BSE). The contents of the notice finally confirm what we had written earlier: Ajay Gupta has indeed quit. What is puzzling is why was this not disclosed earlier or considered by the board? The fact that it was considered and disclosed by the board of directors a month later speaks volumes about the lax regulations and ethics. What the company’s promoters, key shareholders and members of the board did in this interim is anyone’s guess. In fact, we had written “What Is Really Going On in CEBBCO?”, where we asked whether Ajay Gupta had quit, based on a reader’s experience with the company.
A Moneylife reader actually called up CEBBCO’s office last month only to find out that Ajay Gupta had mysteriously quit. But there was no notice on the BSE on this regard. The public relations firm, Dickenson-Seagul, was no longer handling CEBBCO’s account. Even the company’s in-house public relations department did not answer the call.
The letter to BSE, released on 25th April, states: “The board considered the resignation letter dated 26 March 2013 of Mr Ajay Gupta, whole time executive director of the company, who was solely responsible for managing the corporate and financial affairs of the company for couple of years and after due deliberation decided to keep it in abeyance till the formalities relating to handing over charge to an appropriate person and a status report of the projects exclusively managed by him.”
That’s a one month’s gap to consider the resignation! What took the board so long to consider when it should have been an immediate concern? As of now, it would seem that Ajay Gupta is still in charge until someone takes over. But more than this, what is going on what the company? Deepak Towary has been appointed chief executive officer by the board.
What happened in the one month interim is anyone’s guess. All this while, shareholders of the company were scratching their heads as to why their company’s share price was tanking and eroding their networth since beginning of the year? Earlier when we had written a piece about CEBBCO’s share price tanking 35% in two days, Ajay Gupta had denied that anything was wrong with the company (Our pledged shares not being sold in market: Ajay Gupta, Cebbco). Earlier last year, Enam and several brokers had heavily recommended the stock.
In the same letter to the BSE, it is learnt that Akhil Awasthi, a nominee director of Tata Capital Growth Fund had also resigned, but much earlier than Ajay Gupta, on 18 March 2013. His resignation was accepted only on 25 April 2013! As of 31 March 2013, Tata Capital Growth Fund holds 60,05,401 shares, or 10.93% of CEBBCO. Was there a feud between Ajay Gupta and Akhil Awasthi?
More pertinently, a new internal auditory has bee appointed to “strengthen the system and processes” in the company. The statement released to the BSE states: “The board appointed M/s TMG & Associated, Chartered Accountants, Mumbai as new internal auditor of the company in place of M/s Sameer Jain & Associates to strengthen the system and processes in the company as the company has grown manifold in terms of sales and number of manufacturing locations during last couple of years.”
The board of directors of CEBBCO has also reconstituted a remuneration committee which includes Sudhir Vadehra, SP Shah and Ravi Gupta.
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My view: Cebbco is not integral part of Tata. It can take order, if it is profitable.