Actis agrees to wait for CLB order in spat with Nilgiri’s

A day after receiving a setback at the Company Law Board (CLB) in a spat over its rights issue at The Nilgiri Dairy Farm Ltd, Actis said on Saturday that it would abide by the law of the land and would await the CLB's decision on share allotment.

The simmering tiff between the family members of the century-old retail firm Nilgiri's and its private equity investor UK-based Actis had taken a new turn on Friday when the family members of this South India-focused retail chain moved the CLB to block Actis' Rs 35-crore rights issue. In its ruling on the same day, the CLB declared that there should be no allotment of shares with respect to the rights issue till further orders.

An Actis spokesperson said on Saturday that the company had adequate cash to fund operations and the new infusion, as and when it would be allowed, would be used for expansion.

"We've brought in our share of reserves and would be deploying the same after the CLB decision only, the hearing for which would be on February 5," he added.

Actis, on its part, maintains that the shareholding is a non-issue at this point of time as "we are more worried on taking the company forward." According to a spokesperson, the company will see how to resolve the shareholding issue "when we come to that bridge, in case the family members do not bring in their share of money."

The public spat between Actis and members of the family, which runs one of the best-known retail chains in South India, is the result of a range of issues on which the two have hardly ever agreed ever since Actis picked up a 65 per cent stake in The Nilgiri Dairy Farm. Actis had invested Rs 300 crore in the backend operations of the retail chain in 2006.

Sources close to the company say the host of differences on how the company should be managed and expanded is having a severe impact on the operations of the firm, with sales dwindling and net losses set to widen.

A few family members, who have earlier opposed the stake sale to Actis, still maintain that the step is a wrong one and should never have been taken. "The public legal wrangle is the result of this. Key shareholders not being on the same page to run operations will, of course, cause severe damage to the company and this is what we are witnessing," a senior family source told Business Standard.

In November 2009, the Actis-led management got the board's approval for a Rs 35-crore rights issue and went ahead with the same despite stiff resistance from the family.

The family members escalated the issue to the CLB shortly after the Actis-led management decided to retain and invest close to Rs 100 crore in operations of the firm after it sold three hospitality properties belonging to the Nilgiris. The family members had said that they would want the proceeds to be shared as dividends.