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Meet Ramesh Tainwala, the CEO who had to quit for lying in his CV
Leaves with lot of baggage
On June 1, Ramesh Tainwala, the CEO of the world's largest luggage company amid concerns on his credentials and the Samsonite's corporate governance.
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Reuters
The big lie
According to Samsonite, Tainwala stepped down after its board reviewed Blue Orca Capital LLC’s allegations that he falsified his educational credentials. A reference on a website for businesses connected to Tainwala’s family said the group’s flagship “was founded in September 1985 by Dr. Ramesh Tainwala.”
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Getty Images
Doctor who?
The Wall Street Journal reported last week that Tainwala said in an email he never claimed to hold a doctoral degree. He told the Journal he had enrolled for the Ph.D. program in 1992 and friends and colleagues jokingly addressed him as 'doctor' afterward.
Blue Orca, an activist investment fund, also questioned related-party transactions between Samsonite and Indian entities controlled by Tainwala and his family. The short seller alleged Samsonite concealed slowing growth with debt-funded acquisitions, including its 2016 purchase of Tumi Holdings Ltd., and inflated profit margins with questionable accounting linked to its takeovers.
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Reuters
Accusations of poor corporate governance
Samsonite sells and buys raw materials and finished goods from Abhishri Packaging, an Indian manufacturer of hard-side luggage products owned by Tainwala family. Abhishri, in turn, buys products from Samsonite’s Chinese suppliers. Blue Orca's report questioned the reason for Samsonite purchasing from a vendor which buys goods from its own supply chain instead of eliminating the middle man.
With Tainwala controlling both the company and the supplier, Orca believes it is a potential conflict of interest, creating risks of accounting impropriety. In FY 2017, Samsonite disclosed it bought $10.5 million worth products from Abhishri, up 51% from FY 2016. For Abhishri, Samsonite accounted for 58% of its overall sales in 2017.
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AP
Conflict of interest
Samsonite also sells products to Bagzone Lifestyle, a Tainwala familyowned retailer that sells Samsonite’s products through 85 exclusive and 46 multibrand luggage stores in India. Samsonite disclosed $11.2 million in sales to Bagzone in FY2017. The Hong Kong listed luggage maker also disclosed a large receivable balance from Bagzone, equal to more than 100% of sales.
"Bagzone’s mounting receivables balance raises the question of why the related party retailer gets better credit terms than other distributors? It also raises the possibility that Bagzone is hoarding increasing amounts of worthless inventory on behalf of the company,” said the report.
Tainwala, 59, started off as a commodities trader before getting into the luggage business as a maker of the plastic sheets that are molded into suitcases. His ties as a supplier to Samsonite led to a joint venture in the late 1990s to manufacture international-quality luggage in India. Tainwala subsequently rose within the ranks at Samsonite, becoming head of Asia-Pacific by 2011 and CEO in 2014.
