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TexInfra minority shareholders allege funds diversion by promoters
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SME Times News Bureau | 14 Sep, 2020
Minority shareholders with a substantial stake in Texmaco Infrastructure
have alleged that the company is being run only for the promoters and
being "managed as a proprietary concern".
"We are shareholders
since many years and are wondering the way the company is managed. It
gives the impression that the company is managed and run not for all
stakeholders but ONLY promoters. The following facts establish that the
company is managed as a proprietary concern," said Hardik Patel, who
owns 1.28 crore shares, in a letter to S.K. Poddar, Chairman, Texmaco
Infrastructure and Holding Ltd.
"The Independent Directors have
completely become yes men and become like members of family in family
type-run companies with complete disregard to duties and responsibility
of Independent Directors and (are) completely failing in their duties,"
Patel said in the letter.
It is alleged that the promoters of
Texmaco Infrastructure and Holdings Ltd have diverted its funds to give
loan, financial support and to acquire equity investment in listed and
unlisted companies which are either associates or related group
companies.
The net worth of the company for the last three years
and its profit before tax return shows that the promoter and the
management is not capable of even delivering returns equal to bank
interest, Patel has alleged.
Patel said that most of the
investments are in companies where promoters have direct and indirect
interest, regardless of whether these investments are for benefit of all
shareholders.
"The past record shows that these shares have not
been sold and profits are not realised when the prices of the shares
have been at a high. Hence, the motive is not to make profit but misuse
its net worth for own ends. In fact, it would not be out of context to
mention that the investment of the company has depreciated by Rs 66
crore and much more from their peaks," he said.
"We are of strong
belief that the Independent Directors have completely failed in their
duties to protect our interest. The Independent Directors are required
to bring an independent judgement to bear on the Board's deliberations
on issues of strategy, performance, risk management efficient use of
resources and scrutinise the performance of the Board and the
management. They are expected to safeguard the interests of all
stakeholders, and particularly the minority shareholders," the letter to
Poddar said.
Some of the minority shareholders holding
substantial stake in the company have alleged that in spite of the
company having huge positive net worth, the return on net worth for last
4 years has been a meagre 2.5 per cent to 4 per cent per annum, which
is much lower than the safe return which could have been earned had the
same been placed with safe and reputed banks.
It is mainly due to
misuse of resources of the company into related parties, and loans and
investment to listed and unlisted entities related to promoters. The
annual report also reveals that value of investment in promoter related
entities have depreciated by Rs 66 crore, the shareholders said.
The
minority shareholders are concerned "about the imprudent business sense
of the promoters, Independent Directors and management of the company,
whereby it borrows from third parties on interest, incurs liability as
well as mortgages its assets and the money so borrowed is lent to
another group company of promoter".
"Even most valuable assets
i.e Kamla Nagar property is mortgaged to secure liability of group
company," they said, alleging "gross wilful negligence of their duties
and responsibilities by Independent Directors".
The large
shareholders say they have written about their concerns to Saroj Poddar
as well as all Independent Directors, but "they have opted not to
respond".
The large minority shareholders pointed out that they
will reach out to other minority shareholders to make them aware about
various diversion of fund for personal benefits.
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