Shareholders of McLeod Russel defeated all the four special resolutions the company proposed in its 21st Annual General Meeting (AGM) which included borrowing, lending and investing beyond the available limit, and approving the remuneration and waiving off excess remuneration previously paid to its head.
As of June-end this year, the promoters hold 31.03 per cent in the company, most of which is pledged while financial institutions, including foreign portfolio investors, hold 37.32 per cent. The rest is held by individuals, corporate bodies, clearing members and others.
While the ongoig financial crisis in the company prompted it to sell some of its tea estates, McLeod had, as a special resolution, proposed to borrow any sum of money, which together with the existing debt, may exceed the aggregate of its paid-up capital, the free reserves and securities premium.
On the other hand, it also sought approval to offer loans and other form of debt to any person or company, in India or abroad in excess of Rs. 1,900 crore.
Shareholders' assent was also sought to waive off the recovery of an amount of Rs 2.66 crore, which it paid to its chairman, Aditya Khaitan during 2016-17 and also sought approval from the stakeholders to fix the remuneration in excess of the prescribed legal limits.
During its AGM, a section of the shareholders had repeatedly asked Khaitan to withdraw the special resolution pertaining to his pay and one of the shareholders even suggested the chairman to forego salary till the time the company is able to become profitable again.
Some of the shareholders said that McLeod had lent to McNally and the latter’s failure to repay the borrowings direly affected McLeod’s financial position which ultimately led to sale of assets and its share price tanking to an all-time low of around Rs. 11-12 per share. Promoters pledging had also increased and the lenders have started invoking their pledges.
Khaitan, however, assured that a group level restructuring is underway, which involves debt recasting, sale of assets and roping in strategic investors to tide over the ongoing group level financial crisis. SBI Caps has also been appointed to come up with a debt restructuring proposal to the bankers.
McLeod’s total debt is around Rs. 1,700 crore while McNally’s debt is estimated at around Rs. 1,500 crore.
It’s former auditor, Deloitte Haskins & Sells LLP resigned after giving an adverse opinion stating that McLeod’s current liabilities exceeded current assets by Rs 1,436 crore as on end-March 2019. In 2018-19, it adds, the company was unable to discharge its obligations on repayment of loans and settlement of other financial and non-financial liabilities, including statutory ones.
ICDs given by McLeod to promoter group and certain other companies amounted to Rs. 2845.95 crore as on June 30, 2019.
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