Raymond independent directors must protect company from promoters, if need be: Proxy advisory firm IiAS

A proxy advisory firm has urged the independent directors of Raymond to protect the company from its promoters if the need arises. It has asked the independent directors to probe the allegations against Chairman and MD Gautam Singhania, leveled by his estranged wife, Nawaz Modi Singhania. The proxy firm, Institutional Investor Advisory Services (IiAS), asked both Gautam and Nawaz to keep away from the board during the course of the investigation, and suggested appointing an interim CEO for the period.

“We believe that any settlement between the two promoters cannot mean that such behaviour, unless the investigation shows otherwise, be condoned,” the advisory firm stated in an open letter.

Gautam Singhania announced his separation from Nawaz Modi Singhania on social media on November 13, following which she asked for 75 per cent of his $1.4 billion net worth for herself and their daughters. She accused Gautam Singhania of assaulting her and calling her names. Gautam Singhania’s father, Vijaypat Singhania, who headed the company before Gautam, in an interview to Business Today, openly supported his daughter-in-law and not his son.

Also read: Gautam Singhania-Nawaz Modi separation could be a long-drawn-out affair

“Despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don’t want stakeholders thinking that these accusations are to be tolerated,” said IiAS, referring to Nawaz Modi’s allegations against Gautam Singhania using company funds for personal benefits (CEO excesses). It asked the independent directors to undertake an independent investigation into the allegations of assault and CEO excesses.

Raymond’s stock has been in the downtrend after Gautam Singhania announced his separation from his wife. The scrip fell 4.99 per cent to hit a day low of Rs 1,566.90. At this price, the counter has declined 17.65 per cent in 10 straight sessions. On a year-to-date (YTD) basis, the counter has moved around 5 per cent higher.

The firm asked the independent directors to communicate with investors and other stakeholders and assuage their concerns. It also asked them to communicate the course of action taken following the public allegations.

Also read: Gautam Singhania-Nawaz Modi feud: Shareholders jittery, proxy advisories fear further impact on Raymond stock

“Your actions must protect the company from what proposes to be a long-drawn acrimonious battle between Nawaz Modi and Gautam Singhania. To protect yourselves and delineate yourselves from the allegations, you may wish to retain independent legal counsel,” it said, adding that the legal counsel should not have any association with the Raymond group or the Singhania family.

“For the duration of this investigation, you must consider asking both, Nawaz Modi and Gautam Singhania, to take time off from their responsibilities as board members. We recognize that asking the promoters to step aside is not easy – but as independent directors you have a fiduciary responsibility towards minority investors, employees and a larger set of the company’s stakeholders. Therefore, you will need to dispassionately separate ownership from management,” the company said.

The advisory firm stated that the company has an experienced leadership and is in the process of succession for key roles. “Given the leadership depth, we are sure you will be able to find an interim CEO from within the ranks, who can take over from Gautam Singhania for the duration of the investigation,” said IiAS.

Also read: Vijaypat Singhania will support his daughter-in-law Nawaz, not son & Raymond boss Gautam: Full text of exclusive interview

The proxy advisory firm asked independent directors to address a few questions:

1. If either director has violated the company’s code of conduct and ethics policy

2. If there is a possibility of criminal liabilities on the company or the directors

3. If their actions are in consonance with the company’s brand and if their actions can be disassociated from the brand

4. If there are any merits to the allegations of CEO excesses, and what controls can be put to further arrest such slippages

5. If the impending divorce be a distraction for the Chairman and MD, and whether the interim CEO can support unhindered operations of the company

Also read: ‘Please respect my privacy’: Raymond’s Gautam Singhania refuses to comment on ‘assault’ charge by wife Nawaz Modi

The firm said, based on these questions, the independent directors must take steps in the long-term interest of the company and its stakeholders. “If need be, we expect you to protect the company from its own promoters,” it said, adding that boards should have the fortitude to handle such situations objectively.

Meanwhile, Gautam Singhania, in an email to board and staff, said that it is business as usual at Raymond, despite his personal issues. “Media is rife with news about matters pertaining to my personal life. Writing to you to say that I have chosen not to comment on the same, maintaining dignity of my family is paramount to me. I remain resolute as CMD and fully committed towards the smooth functioning of the company and its business. Even in these difficult times for me, I assure you that at Raymond, it is business as usual. I am steadfast to create and deliver value to all our shareholders and ensure the interests of our employees, customers, and other stakeholders. We have made significant strides towards growing our businesses exponentially,” he said.

Also read: ‘It’s business as usual,’ Raymond CMD Gautam Singhania assures board, employees amid split with Nawaz Modi