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McLeod resolutions nixed

Approval to borrow any sum of money (not exceeding Rs 1,000cr over limit)

By TT Bureau in Calcutta

  • Published 12.09.19, 2:04 AM
  • Updated 12.09.19, 2:04 AM
Aditya Khaitan (right) with other board members at the company’s AGM in Calcutta.
Aditya Khaitan (right) with other board members at the company’s AGM in Calcutta. Picture by Sanat Kumar Sinha

Shareholders of bulk tea producer Mcleod Russel India Ltd (MRIL) have not given their assent to the special resolutions introduced at the company’s 21st Annual General Meeting held on Monday.

The company in a notice to the bourses said that four special resolutions were not passed with the requisite majority.

These resolutions include an approval from the shareholders to borrow any sum of money, which together with the current borrowing may exceed the aggregate paid-up capital of the company, its free reserves and securities premium.

However, this amount should not exceed Rs 1,000 crore over and above the limit available to the company.

In the note to the AGM notice, MRIL said that it is in the process of restructuring its debt and discussing with bankers on refinancing. The company is looking to convert short-term debt into long-term ones and extend their maturities as well as their interest payment schedules.

MRIL has also sought shareholders’ approval to give loans, make investments, provide guarantees and securities, in excess of the current limits by Rs 1,900 crore.

The total borrowings on MRIL’s books stand at around Rs 2,000 crore, which include working capital loans.

The move by the shareholders to object to the special resolution, however, will not have any impact on undertaking the company’s restructuring plans, a company official said.

The two other special resolutions relate to the approval of remuneration of managing director Aditya Khaitan and a waiver of the excess remuneration amount.

Khaitan was reappointed as the managing director for a period of three years, effective April 1, 2017. A salary of Rs 15 lakh per month was set along with additional bonus and allowances.

However, as the company was not doing well operationally, Khaitan did not draw a bonus for 2017-18 and 2018-19 and had let go of a special allowance of Rs 4 lakh per month from November 2018.

Some shareholders at the annual general meeting expressed their concerns about the remuneration and asked for reconsideration till the financial position of the company improved.

For the June quarter, MRIL had suffered a consolidated loss of Rs 11.64 crore against a loss of Rs 3.26 crore in the year-ago period.

The troubles for the tea producer, part of the Williamson Magor Group, began when its promoters relied on the financial strength of two group companies — McLeod Russel and Eveready Industries — to support engineering venture McNally Bharat.

In the process, the companies became overleveraged and had to resort to the sale of assets to keep afloat.

Deloitte Haskins & Sells LLP, the independent auditor of Mcleod Russel, had noted that the Rs 1,774.68 crore given as intercorporate deposits to group firms were in the nature of “doubtful recovery”.

The auditor, which subsequently resigned, has been replaced by Lodha and Co, for a period of five years. The shareholders gave their approval for this replacement.