Wednesday, June 06, 2012

L&T Finance Directors fleece the company

L&T Financial Holdings Ltd., just a three year old company (that had to wind up in its earlier avatar L&T Finance Ltd. because of mismanagement and reckless lending) with an annual turnover of Rs.112 crore seeks shareholders approval to pay its Directors a compensation which is unheard of amongst its peers in the Financial Services Industry.

All this, even as the company has a captive and ready customer base by way of customers of L&T Ltd., the holding company that is into EPC and Capital Goods business.  All that it has to do is to finance the equipment / services purchase by its vendors and sit tight.  No sweat.

For such a cakewalk, the company wants to pay its Chairman Y.M.Deosthalee, a Director on the board of L&T Ltd. a remuneration of close to Rs.7.33 crore and its non-executive Directors 1% of net profits.

IIAS, the proxy advisory company has quite rightly debunked this move, outraged by this incongruous payout, especially at a time when the investors in equity markets have been mauled badly by weak investor sentiment and gross under-performance by companies with sequential dwindling earnings.

This resolution deserves to be torpedoed.  Shareholders, do convey your dissent either through postal ballot or by personal presence at the meeting.  Mr.Deosthalee is nearing his retirement and is in a hurry to boost his kitty on his way out... But should you, the institutional and minority shareholders ensure that...?

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