Finolex Cables AGM: 5 directors ousted from company's board

Finolex Cables announced on Friday that five of its directors had been voted down by two of the company's shareholders at its Annual General Meeting (AGM) held on September 29. 

Orbit Electricals Private Limited and Finolex Industries Limited had voted against each of the resolutions for the re-appointments of -- Sunil Upmanyu as Executive Director, Prasad Deshpande as Non-Executive Director, PR Barpande as Non-Executive Independent Director, Avinash S Khare as Non-Executive Independent Director, and Firoza Kapadia as Non-Executive Independent Woman Director.

Where Orbit Electricals Private Limited holds 30.7% in the company, Finolex Industries Limited owns a 14.5%  stake.

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Referring to its communication early on Friday where the company submitted results on voting in the AGM on September 29, 2021, explaining that the negative votes cast by the two corporate shareholders were "disputed/contested." 

FInolex Cables further added that the votes should have "rightfully not been considered pending receipt of court orders since the matter is sub judice in the Civil/criminal courts."

However, the negative votes being "held to be correct" by the courts, the five directors
cease to be on the company's board (as directors) with effect from September 29, 2021, Finolex Cables said in a statement.

Meanwhile, the two proxy advisory firms had also flagged many corporate governance issues at Finolex Cables ahead of its AGM and advised shareholders to vote down the appointments of three directors.

Proxy advisory firms Stakeholder Empowerment Services (SES) and Ingovern Research accused the Pune-based company headed by Deepak Chhabria of taking its shareholders for a ride by violating many provisions of the Companies Act and Sebi norms and advised shareholders to reject the appointments of these directors.

Established in 1958, the Rs 7,500-crore Finolex Cables manufactures electrical and telecom cables and is the flagship company of the Finolex Group.

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The nearly $3 billion Finolex Group comprises Orbit Electricals and Finolex Cables of Deepak Chhabria. While Orbit holds 30.7 per cent in Finolex Cables, Finolex Industries holds 14.5 per cent in the company. Finolex Industries is run by estranged Cousin Prakash Chhabria.

These three companies have four common directors -- Deepak Chhabria and cousin Prakash Chhabria, Sunil Pathak and Sanjay Asher. The main points of contentions are regarding the appointment of directors.

The board, which had appointed PR Barpande, Avinash Shridhar Khare and Firoza Fredoon Kapadia as additional directors on September 30, 2020, also sought shareholders' nod to appoint them as directors again, even though they are liable to retire by rotation, under resolutions 3, 4 & 5 for the AGM. 

At the same time, the board sought to appoint them as independent directors for a five-year term under resolution 8, 9 & 10 and making them not liable to retire by rotation.