Its Modi Vs Modi- The ongoing boardroom battle between the mother-son duo, Bina Modi and Samir Modi, at tobacco major Godfrey Phillips India (GPIL) continues. This is even more critical now with the Annual General Meeting of the company slated for September 6, as this meeting will decide on the future of the board and ultimately the firm.
Samir Modi and his brother Lalit Modi are engaged in a tussle for power with their mother Bina Modi over inheritance that could be worth anywhere between Rs 11,000 -30,000 crore, according to sources.
In an exclusive interaction with FinancialExpress.com, Samir Modi, while maintaining that he is willing to do whatever it takes to end the family dispute, hopes that the shareholders will vote for the right reasons. He referred to the current board as ‘defunct’, referred to his mother as ‘dictator’ and said that the business is at ‘risk of losing almost everything’ in the hands of an ‘inexperienced’ head.
Referring to the mismanagement in the company he said, “I am a firm believer of shareholder value creation. Erosion happens from within, but you don’t know erosion till the erosion happens. We have got Rs 3000 crore lying in surplus, in reserves. Why are we not giving it to shareholders? We have no expansion plans. Our plants are the most modern plants in Asia Pacific. We don’t need that money. I say, give 90 per cent payout; distribute Rs 2700 crore to the shareholder. Those times have changed when the company would give little to the shareholder and keep all to themselves. But you see, you cannot question Hitler. Can you question Dr Bina Modi? Of course, you can’t question Dr Modi.”
While referring his mother to Hitler and calling the board and even the NRC as ‘defunct’, Samir Modi said that “anybody who raises a question about the company’s growth or shareholders’ interests” is ousted with immediate effect. “For 35 years, I have built and contributed to the company, trained under my father, trained with Philip Morris,” he said while stressing on his extensive business experience in the tobacco industry and stating that he was removed overnight.
Here are the edited excerpts from the interview:
What are your views on the stand of the Nomination and Remuneration Committee (NRC)?
In practice, there isn’t a NRC. I got assaulted on May 30. I got three defamation suits from the NRC committee out of four. My mother, per the district court judgment, had to recommend my name to the NRC, which she never did. Then, the NRC appointed my mother, based on the recommendation of the trust for her to become the managing director, which the district court also ordered her to do in my case, which was never done. On one hand, three out of the four NRC members filed defamation suits against me. On the other hand, you’re expecting them to recommend me for reappointment. It doesn’t make sense. For 35 years, I have built and contributed to the company, trained under my father, trained with Philip Morris. So I have had experience. Now suddenly I’m the bad guy. Why? Because I am asking questions like what about our brands? Why are we shutting down 24Seven? Anybody that asked the question is being removed.
The NRC elected me three years ago, for a five-year term, which ends in 2026. So, NRC had already qualified me for the appointment. It’s just that since I come up by rotation, I feel that the NRC in this case is not independent.
The reason they have given is misconduct. What is the misconduct? I didn’t go to the audit committee meeting, which I was not invited to. I have been attending the audit committee meeting for 35 years. It doesn’t make sense, my misconduct is raising an FIR for getting my finger broken and going into an operation. I also have a grievously hurt report. That’s my misconduct. As director, promoter, owner, I got bashed up by the PSO of my mother. The dispute is dictatorship vs democracy.
Further, my mother has raised her remuneration to 14 per cent of profits. How is that conducive to the shareholder? Our brand is going down. How’s it conducive to a shareholder? My nephew raised discrepancies in 2019 in SEBI and company’s law and he was removed too.I was a blue eyed boy for my father, now I have become the devil for my mother.
What is the stand of the board members?
There needs to be a real board. There are 10 of us. Out of this, four people are from NRC, one is my mother, one is Samir Modi, and then the CEO. What are you left with? You’re not left with any.
I have been on the board since 1994. I have the most experience among all the board members in tobacco. I have been trained by Philip Morris, which is a partner and a leader in the tobacco industry worldwide. And today, because I did not support my mother, because I raised my voice, I am ousted. if supporting the shareholders of my company is my crime, I stand guilty. If questioning why our brands are going down is my crime, I stand guilty. If getting assaulted and filing an FIR is my crime, I’m guilty. The board sat there while I got assaulted.
How has the ongoing dispute in the company’s leadership affected the company’s financials?
The dispute escalated recently. Exponentially since my finger got broken, then my nephew filing a case in the High Court, which is coming up for hearing in the next few days for final judgment.
Effect takes time. Effect is not overnight.
Long term effect of this will also show on employees. Can you imagine a promoter, somebody who contributed to a company for 35 years, is removed, bashed up and then removed overnight. What’s the job security for the employees?
Everybody is watching. We are going to the Flintstone era.
What will be the key areas of discussion at the upcoming AGM on Sep 6?
I feel that what will happen and should happen is focus on brands. Right now, our brands (Focus and Cavanders) are not being focused on, versus Marlboro, the only brand that’s been focused on, and that’s one of the contention that I have. We should launch new brands. New ideas, new thoughts, new brand innovation is what needs to be focused on. Not enough is being done there.
However, the focus of AGM is going to be only three: reappointment of my mother, appointment of my sister as director and special resolution as ED. And number three is removal of Samir Modi from the company so that the board becomes defunct.
Will this have any impact on other businesses under the group?
They have shut down 24Seven. We were present in Punjab, Hyderabad and Delhi with 151 stores. Now, Punjab and Hyderabad operations are shut down and around 15-18 stores in Delhi are open, without branding, for liquidating inventory. They’re trying to sell it to another commercial chain.
We had spent Rs 700 crore in 24Seven and now was the time to recover that. My father wanted an alternate business, just like ITC has alternate businesses for tobacco. Now you have spent the money, and when it comes time to reap the fruits, you have withdrawn the money and shut them down, taking a liquidation hit on the balance sheet of Rs 100 crore. It doesn’t make sense.
Besides this, will there be any major announcement at the AGM on the company’s future growth plans?
Whatever announcement they will make, they will try to do to save their skin. The announcement that they should be making in the AGM is about getting new blood, keeping experienced people like Samir Modi in and giving abnormal profits to shareholders because you don’t have any investments.
From: financialexpress
Financial News
