Patel sharpens attack against Raymond

A minority shareholder continues his fight against a big company. Sharpening his attack against Raymond, minority shareholder Bharat Patel has said the textile company spent lakhs of rupees on boats and aircraft, which is ‘nothing but day light robbery’ in violation of governance standards and transparency norms.

According to the Raymond’s annual report 2016-17, the expenditure on aircraft was Rs 4,808.68 lakh as on March 31, 2016, including Rs 2077.15 lakh spent during 2015-16.

The company has also spent Rs 2044.97 lakh on boats and water equipments. However, it received Rs 33.86 lakh by disposing off some boats or/and water equipments in 2016-17.

The scathing attack is also with regard to construction and redevelopment of the Bhulabhai Desai Road property (called “JK House”).

Raymond in its annual report has said capital work in progress includes Rs 27,027.91 lakh (Rs 18,668.63 lakh in 2015-16 and Rs 16,451.49 lakh as on April 1, 2015) towards cost incurred till date for redevelopment of company’s property at Bhulabhai Desai Road, Mumbai. After the municipal commissioner approved the revised plan, the company had applied for an occupancy certificate, which has been received from the municipal corporation during the year, it said. In terms of the tripartite agreements executed by the company in 2007, an offer is required to be made for allotment of premises in the new building constructed on the property situated at Bhulabhai Desai Road. The company has received letters/notices from some of the sub-lessees such as Vijaypath Singhania, Akshaypat Singhania, Veenadevi Singhania and Anant Singhania, who are considered to be related parties, seeking to purchase premises located in JK House.

Akshaypat Singhania, Veenadevi Singhania and Anant Singhania have also initiated court proceedings with respect to proposed arbitration to enforce their claim.

As the transaction is not in the ordinary course of business and on an arm’s length basis, considering the current market price, the audit committee has referred the matter to the shareholders and recommended that the board of directors should refer the matter to the shareholders for their approval, and that’s what they did.

Pending the approval, the amount already spent in respect of the said tenements continues to be carried in the books of account under capital work in progress.

Two significant events took place last month in the Bharat Patel-helmed JHP Securities versus Raymond battle. On April 28, under intimation under Regulation 30 of SEBI Listing Obligations & Disclosure Regulations 2015, Raymond after its board meeting informed the ministry of corporate affairs, National Stock Exchange and Luxembourg Stock Exchange that they have recommended appointment of Walker Chandiok & Co LLP, chartered accountants as statutory auditors of the company to hold office from the conclusion of the ensuing 92nd AGM to the conclusion of the 97th AGM.

This expedient move has come as a result of the pressure put by Bharat Patel's JHP Securities' activism, where the previous auditor Dalal & Shah LLP was found wanting in following and maintaining due process with regard to governance standards and transparency norms.

Financial Chronicle, highlighting the dubious role of the auditor Dalal & Shah LLP in its investigation had on March 19 written “After being fobbed off many times by the company secretary of Raymond, he (Patel) has now written directly to chartered accountants M/s Dalal and Shah for redressal, but to no avail.”

In a missive dated March 10 dashed off by JHP Securities, his investing firm, Patel has asked pertinent questions regarding the construction and redevelopment of the Bhulabhai Desai Road property.

Raising serious questions over the conduct of the auditor, which pretty much failed in its statutory duties, Patel had questioned: “May we know why the redevelopment expenses of Bhulabhai Desai Road property was not disclosed to the shareholders from 2009-10 to 2012-13 and under what circumstances you felt that it will be better and proper to disclose in 2013-14 onwards? Is this not negligence in performance of your statutory duty to the shareholders with a clear intention to hide such huge expenses from the shareholders? It is not surprising that Dalal Shah & Co has lost its job after failing in its watch?”

The same day, the Raymond board also accepted the resignation of whole time director H Sunder, Chief Financial Officer of the company.