CHENNAI: When Tamilnadu Mercantile Bank’s first AGM in five years kicks off in Thoothukudi on Friday, the faction led by mining baron S Vaikundarajan might well be walking in with a clear vote share advantage in its battle for control of the nearly century-old bank. Rival factions were running neck and neck till the Principal Subordinate Judge Court at Vellore issued an interim order on Tuesday,restraining two foreign institutional investors (FIIs) from casting votes in the AGM.
Reliable sources have told Express that the injunction might well have thrown a spanner into the works for those opposing Vaikundarajan’s bid to wrest control.
“Each side has approximately 86,000 to 89,000 shares and the votes that go along with them. Unfortunately, the injunction has put into question the 27,000 odd votes held by the FIIs and the establishment. If this isn’t solved, the Vaikundarajan faction is going to have a clear advantage,” said the source.
The bank, founded in 1921 as the Nadar Bank, has several investors with small shareholdings. The bank’s equity is split into 2.8 lakh shares, each of Rs 10 face value. According to sources, around 50,000 shares are classified as dead or inactive and the Madras High Court has curtailed the voting rights of 54,000 shares held by 18 FIIs. The injunction of the Principal Subordinate Judge Court has nearly removed the voting privileges of two FIIs - Mauritius-based firms Robert & Ardis James Company Ltd and Sub Continental Equities Ltd.
However, the faction supporting the FIIs have not thrown in the towel.
According to a member of the current establishment, the injunction is not valid because the Madras High Court has already made clear directions as to who can vote. The results of the elections for the 10 directorships will not be immediately known however. The e-voting has already been completed and the AGM is only likely to see around 10 per cent of the votes being physically polled on Friday. The battle for control has seen shares of thebank shoot up in value to over Rs 1 lakh per share.
The bank’s troubles started in 1994, when a large group of shareholders sold over 67 per cent of the shareholding to the Ruia led Essar Group. The sale was roundly opposed by the Nadar community and the Ruias sold the shares to entrepreneur C Sivasankaran. Eventually, a group of Nadars raised enough capital to buy around half the stake with Sivasankaran. The rest, 24.93 per cent, was sold to a group of foreign investors. Their holding is being contested in the courts, with the Madras High Court observing that the arrangement by which the group manages the stake lacks transparency.
Apart from Vaikundarajan, who owns 0.54 per cent and controls around 4-6 per cent stake in the bank, other major holdings include those of Kannan Adityan (around 7 per cent, 5 per cent of which is disputed), C S Rajendran of Ayyanar Coffee group (4 per cent), V V D Vikraman (3 per cent), M G M Maran (5 per cent) and Pioneer Group Asia(4 per cent). Vaikundarajan, his brother S Jagatheesan, relative P C Asok Kumar and associate D Gnanaraj are contesting theelections.
He is also reported to have secured the support of the Dakshina Nadar Sangam and a few other shareholders.