Indiabulls Financial Housing Ltd held its AGM on Monday (11 August) which put the final touches to the split between Indiabulls promoters -- Sameer Gehlaut, Rajeev Rattan and Saurabh Mittal. Rattan and Mittal were ousted from the board of directors of the company, along with three independent directors. Curious as the ‘ouster’ may appear, CEO Gagan Banga, in a conversation with BW|Businessworld, confirmed that the parting of ways, as he called it, was amicable, as was informed to the exchanges on July 9.
Meanwhile, shareholders also inducted two former bankers, KC Chakrabarty, the former deputy governor of the Reserve Bank of India and RM Malla, former chairman of IDBI Bank. At least one of the proposals, to remove independent director Joginder Singh Kataria was met with disapproval from the public institutional shareholders, 70 per cent of whom voted against the proposal. The churn in the board composition was merely to bring in better people on the board including a former RBI deputy governor, said Banga.
Defending the rationale for the split of businesses between the promoters, Banga said that when you have an entity that has reached the size and scale of Indiabulls Housing Finance, it is imperative that one derisks the entity from the other businesses of the group. He points out how rating agencies have upgraded the company post the announcement.
What analysts found curious was the resolutions that sought to remove the five directors from the board. If the settlement was amicable, why did the company have to resort to a removal? Denying that any of the promoters moved the said resolution, Banga also states that the independent directors did not resign because an immediate resignation would have violated the provisions of Clause 49 of the SEBI Listing agreement, which require 50 per cent of the board to be comprised of independent directors. Regarding the proposal to remove the promoter directors, Banga said the concerned directors themselves voted in favour of the proposal to remove them.
Interestingly, according to a news report in the Economic Times, the proposals were received three days before the split was formalised, by a ‘mystery shareholder’.