The longstanding ownership dispute at chemical company Hikal has reached a decisive point, resulting in the conclusion of Bharat Forge Chairman & MD Baba Kalyani’s 31-year tenure as a board member after a shareholder vote.
The catalyst for this change lies in the requirement for non-executive, non-independent directors like Baba to secure a certain percentage of votes for their continued tenure. Turning 75 on January 7, Baba needed support from 75% of Hikal’s shareholders to remain on the board. However, he managed to secure only around 52% of the votes. Regulatory filings reveal that about 48% of the shareholders who cast their votes were against his reappointment.
Sugandha Hiremath’s substantial 35% stake in Hikal, as of September-end, played a significant role in influencing the anticipated outcome. As previously reported, she voted against her brother’s continuation as a director, contributing to the defeat of the resolution that required 75% support. The month-long voting process, combining postal ballot and electronic voting, concluded on December 24, with approximately 79% of Hikal shares voted.
The institutional landscape reflected the divide, with about 27% of Hikal’s institutional holders opposing the reappointment resolution. Simultaneously, 43% of non-promoter and non-institutional shareholders favored Baba’s removal from the board.
This development occurs amid an ongoing legal battle between the siblings, with Sugandha insisting on Baba transferring his 34% share in the chemical company, citing a family arrangement from 1994. The matter remains unresolved and is pending before the Bombay High Court.
Hikal, a significant player in the Indian chemical industry with five manufacturing facilities and an FY23 revenue of Rs 2,028 crore, faces these internal challenges amidst its continued business operations. Earlier in the year, Baba Kalyani had encountered challenges in retaining his board seat at Bharat Forge. Despite facing opposition from about 54% of institutional investors, his dominant holding of over 45% in the group flagship secured his continued position as MD of the industrial component maker.
