Proxy advisory firm InGovern Research Services has raised flags over corporate governance issues at TD Power Systems (TDPSL) and asked shareholders to vote against a resolution to reappoint Mohib N Khericha as a director. It also wanted shareholders to demand a forensic audit into the engineering services firm’s actions.
The advisory comes ahead of the company’s AGM convened on August 9.
According to InGovern, the notice seeking re-appointment of Khericha fails to mention a petition filed against him and the interim court order passed restricting transferability of certain shares. The company’s director’s report also does not make any mention of the suit filed by Vijay R Kirloskar, alleging breach of trust and cheating on the part of Khericha, it added.
On July 12, 2023, based on a petition filed by Vijay R Kirloskar, the Karnataka high court 2023, passed an ad-interim order against several entities, including Khericha and Nikhil Kumar (MD of TDPSL and nephew of Kirloskar) restraining them from dealing in 2.51-crore shares of TDPSL.
Vijay Kirloskar, chairman of Bengaluru-based Kirloskar Electric Company, had earlier moved the court, staking claims to the shares.
The court had passed an ad-interim order against several persons, including Khericha and Kumar, restraining them from dealing the shares of TDPSL.
Shareholders should seek appointment of an independent and reputed external entity for conducting a forensic audit into the affairs of the company, including an investigation and verification of all records, books of accounts, and other documents. The audit should also include conduct of the company’s board – including that of Khericha – more so when a resolution is to be passed for his reappointment, InGovern said in note.
The shareholders also should seek whether the company and its board views Khericha as “fit and proper” to be considered for reappointment as a director.
InGovern has also asked shareholders to seek reasons from TDPS for promoters offloading stake and disclosures regarding the litigation with Kirloskar, where the company is also a litigant.
Based out of Bengaluru, the Rs 4,000-crore company manufactures generators and motors for the power sector.
Earlier on June 30, 2023, TDPSL’s promoters and promoter group including Nikhil Kumar, Mohib Khericha, Chartered Capital, Saphire Finman Services, Hitoshi Matsuo sold around 3.78 crore shares representing 24.21% of TDPSL’s equity through open market sale. These shares were acquired by institutional investors such as Aditya Birla Sun Life MF, BNP Paribas, HDFC MF, ICICI Prudential MF, Goldman Sachs LIC MF, Mahindra MF, Mirae MF, Oxbow Master Fund, Quant MF, Societe Generale among others.
The sale resulted in the shareholding of promoters going down from 58.45% to 34.30% in one quarter.