Vote against Tanti: advisory firm tells Suzlon shareholders

Under Tulsi Tanti's leadership, the company's performance has continued to falter, IiAS says

The shareholders of wind energy marker Suzlon should vote against the re-appointment of the chairman Tulsi Tanti as its managing director, feels a proxy advisory firm. Institutional Investor Advisory Services India (IiAS) gives voting recommendations to shareholders on company resolutions.

“Under Tulsi Tanti’s leadership, the company’s performance has continued to falter and the company is now under a corporate debt restructuring (CDR) programme. IiAS believes that promoters’ interests will also be served by bringing in new management,” the advisory firm said, in a press release.

Suzlon sought votes from its shareholders to extend the tenure of promoter Tanti as its MD for the next three years, via postal ballot. Tanti and the promoter group own 39% stake. Tanti is the founding promoter of the wind energy company is a Gujarat based businessman, who started his entrepreneurial venture with a textile mills. He had set-up Suzlon Energy in 1995.

“Despite the weak performance, Suzlon is seeking shareholder approval to his (Tanti's) remuneration from Rs 2 crore to Rs 3 crore per annum. Given that IiAS recommends voting against the reappointment of Tulsi Tanti as MD, any discussion over his compensation is moot,” the advisory firm said. The firm said that it believes that any increase in compensation must be linked to an improvement in company’s financial performance.

“Therefore, if required to vote on Tulsi Tanti’s remuneration, IiAS recommends voting against the resolution,” IiAS said, in a strongly worded release. Suzlon went through debt restructuring last year, after battling huge debt after it acquired stakes in two global companies—Hansen and RePower (now called Senvion) in 2007.

In spite of the recommendation, E Balaji, an independent human resource expert believes that, shareholder activism in voting process is not very high in India. “Since public shareholders are distributed, there cannot form a pressure group like institutional investor, However, activities in India of shareholders taking a firm stand against the company and the management are very limited,” he said.

While the company exited its investment in gearbox maker Hansen, it is the 100 per cent owner of German wind equipment maker, RePower. After heavy interest payments took toll on the company, it defaulted on foreign currency convertible bonds (FCCB) of around $200 million in October 2012.

The bankers of Suzlon however gave a two-year interest holiday amongst other leeway as a part of its CDR, along with stringent conditions as they restructured Rs 9,000 crore worth debt. It currently has an outstanding debt of Rs 15,190 crore. The company's netwroth eroded by 85% since 2011 to 2013 March, IiAS points out.