Perhaps for the first time since the formation of Gujarat state it has so happened that the chairperson, managing director and director (all IAS officers) were not present at the annual general meeting (AGM) of a listed public sector enterprise (PSE).
Fearing the wrath of minority shareholders, who have a 26% stake in Gujarat Mineral Development Corp (GMDC), chairperson Gauri Kumar, managing director Vijaylaxmi Joshi and director Tapan Ray did a vanishing act at the AGM on Thursday.
Many angry shareholders had come prepared to grill the management for their proposal to contribute 30% of profit before tax (PBT) to a state-owned agency Gujarat Socio Economic Development Society for social causes. Secretary from the state mining department, RK Shah, was nominated by GMDC’s management to conduct the AGM. But, after passing the ordinary resolutions regarding dividend and annual results for 2007-08, he could not take up the special resolutions and was forced to adjourn the AGM to September 24, due to strong protests from the shareholders present at the venue.
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Apart from this major contentious issue, the other special resolutions to increase the authorised share capital as well as issue of bonus shares could not be passed.
Gauri Kumar could not be contacted. GMDC’s managing director, VJ Joshi, arrogantly told DNA’s correspondent, “I will not speak to the press.” This entire episode has severely hit the investor-friendly image that Gujarat’s PSEs have developed over the past few decades. With 74% stake in GMDC, the state government can clear all the special resolutions legally. But, the company’s market valuations will take a big hit and it will go against the corporate governance norms which seek to protect the interest of retail shareholders.
“It has never happened in the history of Gujarat, that a company’s top officials were absent at an AGM,” said Parthiv Shah, senior research analyst at city-based broking firm Khandwala Integrated Financial Services.
“The AGM is the only platform where shareholders can question the company officials and know more about important business decisions that have an impact on their investments. The decision to transfer 30% of PBT for social causes is like moving away from a free-market place to a communist era,” he said.
Chandrakant Sandesara, a shareholder of GMDC who attended the AGM told DNA, “Why are the company’s top officials not willing to face us. If the government wants to spend more on social causes they should increase the dividend payouts.”
He said shareholders from Mumbai and other places outside the state had specially come down to Ahmedabad to voice their concern at the AGM.
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