The battle to wrest control of Finolex Cables (FCL) — a leading electricals and telecom cable company — is set to intensify. Prakash Chhabria, the majority shareholder of FCL, will vote against the reappointment of directors, who are perceived to be close to his cousin and rival Deepak Chhabria, on the company’s board.
Prakash Chhabria, whose father founded the Finolex group, currently owns a controlling stake of 45.2 per cent in FCL through two entities — Orbit Electricals and Finolex Industries. But the day-to-day management of FCL is currently with Deepak Chhabria, the executive chairman of the company.
FCL has six board members and the company has proposed to ratify the appointment of five directors in the upcoming annual general meeting.
Sources close to Finolex group told BusinessLine that Prakash is unhappy because Deepak has ignored the mandate given by the majority shareholders. Both the Chhabrias did not respond to phone calls and e-mails. Deepak is also on the board of Orbit Electricals that owns 30.7 per cent stake in FCL. Deepak owns around 8 per cent stake in Orbit. Large shareholders of FCL will be meeting this week to decide the future course of action, sources said.
A gift deed and the spat
The family feud started on March 28, 2016, when Finolex group founder Pralhad Chhabria handed over a gift deed to his son, Prakash. The deed transferred 70.4 per cent out of the 82.07 per cent of the holding company Orbit’s shares, which made Prakash the majority owner in Orbit and thereby also the largest shareholder in FCL. This turned into a bone of contention between Prakash and Deepak, son of FCL’s co-promoter Kishandas Chhabria.
BusinessLine had recently reported that proxy advisory firm Ingovern has also red-flagged the appointment of directors. It said that FCL has taken its shareholders for a ride when it comes to board-level appointments as all the directors lack shareholder approvals. The Hindu BusinessLine