Sebi: Minority holders mine Sebi on merger of tech firm Hinduja
The company has denied any wrongdoing with respect to Sebi as well as complaining shareholder say that these are baseless allegations. ET reviewed the contents of the letters.
In a letter to Sebi at the end of July, minority shareholders wrote to the regulator asking the regulator to prevent “misgovernance, protect shareholders’ interests and ensure compliance with listing obligations.” and other SEBI regulations.”
“Both Hinduja Global Solutions Limited and NXT Digital Limited are currently controlled and substantially owned by Ashok P Hinduja,” reads a letter to Sebi chairman from a minority shareholder. “…Hinduja Global Solutions Ltd., has made $1.2 billion from the sale of its healthcare services. business and does not reward shareholders with a free dividend, which is currently acquiring NXT Digital controlled by Ashok P Hinduja and will become a channel to divert funds for personal use and market manipulation. Therefore, SEBI must intervene immediately to prevent such misconduct in a Company whose Board of Directors is directly or indirectly employed or controlled by Mr. Ashok P Hinduja,” the letter added. .
Barings PE Asia acquired the healthcare industry last August.
The Hinduja family owns 67.13% in HGS as of June 2022 quarter data. It also owns 64.67% in NXT Digital. In addition, group companies
International Holdings Ltd owns 6.51%, flagship owns 1.25% and Indusind owns another 1.77% but is classified as a public shareholder. However, IndusInd International Holdings Ltd is classified as a promotion entity by IndusInd Bank, also backed by the Hinduja family. IndusInd Communication is another subsidiary of Hinduja Group.
Shareholders of HGS and NXt Global are expected to meet on Friday to approve the all-stock agreement, which will then be forwarded to the NCLT for approval.
Hinduja Global in its response to Sebi on August 5 responded by saying that the claims, allegations and content raised are untrue, baseless, misunderstood and completely untrue. truth. ”
The company stated its board of directors reviewed the potential opportunities on 14 January 2022 and agreed in principle to acquire NXT Digital Limited’s digital business. Then, after reviewing the valuation reports of independent appraisers – KPMG LLP and M/s Valuation Services. SSPA & Co., Chartered Accountants – Audit Committee and Board of Directors approved the acquisition of NDL’s digital business on February 17, 2022. Proposal has been submitted to NCLT, Mumbai Bench on June 9, 2022, after the BSE and NSE had issued “no adverse observation letters,” HGS company secretary Narendra Singh told Sebi in that letter.
“The acquisition of the aforementioned Business will enable the company to diversify and expand its presence in the rapidly growing digital, media and media business in India,” the letter said. said more. In addition to using a portion of the proceeds for an equity share buyback proposal, HGS also plans to use a portion of the proceeds for organic/inorganic growth.
Letters to HGS did not generate a response as of press time.
Earlier this year, the $14 billion Hinduja Group announced a restructuring of several units of the group. Step one involves NXTDigital having listed the merger of its operations into Hinduja Global Solutions. NxtDigital deals with the group’s digital and media businesses including broadband, digital cable television, content delivery and telemarketing services. HGS is primarily a BPO that provides technology-related customer support services to overseas businesses.
Following regulatory approval, step two of the restructuring process begins with the unlisted Hinduja Leyland Finance (HLF), a non-bank lending company and physical subsidiary of Ashok Leyland, get involved in NXT Digital, HLF, through a consolidation mechanism. In January, HGS agreed to buy Nxt Global. Then, in July, the merger of the NBFC branch into NXT Digital was approved by
REPORT, DISPLAY BOX
Followers of the old Hinduja family say that HGS could very well become the new front for the ongoing battle between the family of four Hinduja brothers — Srichand, Gopichand, Prakash and Ashok. Ashok Hinduja, the youngest son of Parmanand Hinduja, founder of the Hinduja Group, is the honorary chairman of HGS but not a board member. Srichand’s two daughters, Vinoo and Shanu, are fighting legal cases against their three uncles across multiple jurisdictions.
In a letter to Sebi in July, the minority shareholder alleges that the flaws in HGS began after September 2019, when six directors quit mass. The three promotion directors are Vinoo S. Hinduja, Mr. Ramkrishan P. Hinduja and Shanu Hinduja while Ranjan Mohan, RP Chitale are among the independent directors who have left.
The company, which denies these allegations, claims that two independent directors have resigned after completing their terms effective July 3, 2019. In addition, a third independent director, has resigned. due to his professional and personal activities effective September 2, 2019.
Questioning the “independence” of the new board members, the minority shareholder also alleges a conflict of interest as an independent director, Bhumika Batra is an attorney at a private law firm Ask Ashok P Hinduja. Batra has been a partner of Crawford Bayley & Co for 19 years. “The Chairman, Mr. YM Kale is affiliated with The Hinduja Group Limited, a company essentially owned and controlled by Mr. Ashok P Hinduja and another director, Mr. Sudhanshu Tripathi is an employee of Hinduja Limited.
The Company has stated that all of the Board members of the Company come from diverse fields with diverse and rich experience and are people who have proven excellence in their fields. choose. ”