Raymond faces flak over RPTs with promoter family: Mint

Proxy advisory firms have red-flagged Raymond Ltd’s proposed sale of prime property to its promoters, calling the deal grossly undervalued.

Raymond is planning to sell four duplex apartments at JK House in South Mumbai’s Breach Candy area to members of the promoter Singhania family.

According to information in the AGM notice, in March 1994, Raymond leased JK House to Pashmina Holdings at Rs6,000 per flat per month, which sub-leased them a month later to four Singhania family members—Veenadevi Singhania, Vijaypat Singhania, Madhupati Singhania, and Akshaypat Singhania. All four are related to Gautam Singhania, chairman and managing director of Raymond. In November 2007, Raymond, Pashmina Holdings, and the four sub-lessees signed four separate tripartite agreements that allowed Raymond to redevelop the JK House. During the period of redevelopment, Raymond provided the family members alternative accommodation.

Between July 2016 and January 2017, three of the four tenants of JK House—Vijaypat, Akshaypat and Veenadevi—wrote to Raymond “exercising their option to purchase the new apartments”. For this, two arbitration petitions were filed before the Bombay High Court by Akshaypat Singhania, along with Veenadevi Singhania and Anant Singhania. While fighting those petitions, Raymond has sought shareholders’ approval for the sales.

“This is a gross violation of the rules of corporate governance and the independent directors should be flagged,” Shriram Subramanian, founder and managing director of proxy advisory firm InGovern said. “The question to ask is if there are similar transactions that have been disclosed to the shareholders,” he said, adding that for a company that has an approximate market capitalization of Rs4,500 crore, Rs650 crore off the books is a sizeable amount.

Source: Mint – 26 May 2017