Jupiter doubts governance at Godfrey Phillips after Lalit Modi's claim

GPI is part of the KK Modi group of companies, in the news after one of the family members, Lalit Modi, stated all assets of the group are up for sale.

Concerns on corporate governance at Godfrey Phillips (GPI) was raised in November by Jupiter Asset Management, which has a little over 9 per cent of the former's equity capital. These, Jupiter had contended, lagged the best practices. It cited a report in this regard by Institutional Investor Advisory Services (IIAS). 

GPI is part of the KK Modi group of companies, in the news after one of the family members, Lalit Modi, stated all assets of the group (GPI, Indofil Industries, Modicare) are up for sale. He's also tweeted that he does not approve of his mother, Bina Modi, widow of K K Modi, being at the helm of the group, as she is not qualified enough, in his opinion, for such a charge. Her doing so would dilute the group's market value, Lalit Modi had said. Bina Modi had succeeded K K Modi after his demise as president and managing director of GPI. On Tuesday, the firm denied any move to sell the tobacco firm. A message to Samir Modi, executive director at GPI and other son of Bina Modi, on the Jupiter letter did not elicit a response. 

Jupiter's letter of last November to the board of directors aks if they or the firm's officers knew the board and its promoters were required to make disclosures in some key areas. For one, if there was a trust deed with provisions which may enable certain shareholders or promoters to exercise control disproportionate to their equity ownership. Two, if they were  aware of any shareholder agreement between the promoters and the company which could affect the voting agreements. Three, whether there are any clauses in the trust deed which, when enacted and disclosed, could have a material impact on the share price and, if so, if this had been triggered. 

The letter says under the regulatory guidelines, listed entities have to provide information to all shareholders on capital structures and arrangements that enable some of them to obtain a degree of control disproportionate to their equity ownership.  

The IIAS report ranks GPI as 99th among companies comprising the BSE S&P 100, with a governance score of 44. The letter says it would like the board to consider all these points, to demonstrate leadership on behalf of all shareholders.