Godfrey Phillips India board pushes for additional independent director

Currently while there are four independent directors at present, there are five non-independent ones, including Ruchir Modi and R A Shah, who is chairman of the company

The board of tobacco major Godfrey Phillips India (GPI), which met on Tuesday, pushed for appointing an additional independent director, according to sources privy to the discussions.

The move, once cleared, will increase the number of independent directors on the board to five, while non-independent directors would be of the same strength. This, says a source in the know, would give the independent directors more leeway to hold discussions on all contentious issues.

Currently while there are four independent directors, there are five non-independent ones, including Ruchir Modi and R A Shah, who is chairman of the company. The meeting, which was called to announce the quarterly results of the company, also discussed the response of Godfrey Phillips to allegations made by Ruchir Modi in a communication to the Securities and Exchange Board of India (Sebi).

Ruchir Modi had alleged in a letter to Sebi that Bina Modi’s appointment as president and managing director after the death of her husband, K K Modi, violated the listing agreement and a resolution on her appointment had been defeated by the shareholders, but was still passed.

The board gave a clean chit to the appointment of Bina Modi as president and managing director of GPI, saying that it followed all rules of the regulator. Sources in the know say no listing rule was violated.

As far as the letter to Sebi was concerned, they said as he represented his father, Lalit Modi, it was more a shareholder grievance.

A GPI spokesperson did not respond to questions on the board meet. Nor did Lalit Bhasin, Anup N Kothari, Atul Kumar Gupta, and Nirmal Bagri – all independent board members Ruchir Modi has made complained to the Ministry of Corporate Affairs about “mismanagement” in the company, especially in the appointment of Bina Modi as president and managing director. He has also alleged that the board did not disclose things it was supposed to under Sebi regulations.

Lalit Modi took on his mother, Bina Modi, and his brother Samir and sister Charu after the death of his father, alleging that her mother was not capable of running the business. He said under a trust deed, his father had stipulated that in the case of unanimity among the family members on continuance of the business, shares of the key companies in the group, which included flagship GPI, had to be sold. However, the other family members, led by Bina Modi, opposed the move.

Bina Modi and Samir Modi are executive directors.  

Ruchir Modi has complained to Sebi that the trust deed through which the GPI shareholding was controlled by the family was not disclosed to the stock exchanges or the shareholders.