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Harsh V Lodha reappointed as director in two MP Birla Group firms

He is now entitled to a 0.75% share in Birla Corp and Birla Cable profits; his profit-related commission can now exceed 50% of total remuneration of all non-exec directors of Vindhya Telelinks

Birla Corporation | Companies | Calcutta High Court

Avishek Rakshit  |  Kolkata 

Harsh V Lodha
While group firms Vindhya Telelinks and Birla Cable can now reappoint Lodha as director following a nod from shareholders, dividend to shareholders of Birla Corporation and Vindhya Telelinks may also be paid now. Illustration by Ajay Mohanty

Following permission from a divisional Bench of the to make public the decisions taken in annual general meetings (AGMs), Harsh V Lodha has been reappointed director in two MP Birla Group firms, and will be entitled to get part of their profits.

The order, which set aside the August 9 ruling of a single-judge Bench, prevented the group entities from publishing the voting results of the last AGM. However, the firms will now be able to execute decisions taken at the AGM last year.

People in the know said the Birlas would appeal against the order in a higher court.

While group firms Vindhya Telelinks and Birla Cable can now reappoint Lodha as director following a nod from shareholders, dividend to shareholders of and Vindhya Telelinks may also be paid now.

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Lodha is entitled to have 0.75 per cent share in net profit of and Birla Cable, while profit-related commission for Lodha may now exceed 50 per cent of the total annual remuneration, payable to all non-executive directors of Vindhya Telelinks.

Lodha is chairman of the flagship Birla Corporation, as well as director in other three firms.

The profit-related compensation will be over and above the sitting fees and reimbursement of other expenses payable to Lodha, for participation in the board, committee, and other meetings.


Over this decision, reasoned Lodha had contributed substantially towards its sustained growth, and played an active role since his appointment as non-executive chairman in October 2009.

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In addition, non-executive directors, including independent directors of Birla Corporation and Vindhya Telelinks, are now entitled to a profit-related commission, within the overall maximum limit of 1 per cent per annum.

Shareholders of Vindhya Telelinks and Birla Cable passed the resolution to reappoint Lodha in these respective firms with above 99 per cent votes in favour, as well as special resolutions that provide a pie to Lodha and other directors in the firms’ profits. Birla Corporation will now pay Rs 69.63 crore as dividend at the rate of Rs 7.50 per share, while Vindhya Telelinks will pay Rs 14.22 crore at the rate of Rs 12 per share.

A source in Birla Corporation said the court order would be retrospective in nature, and the compensation to Lodha can be counted for the whole of FY20.

Debanjan Mandal, partner of Fox & Mandal (solicitor firm representing Lodha), said: “This is a vindication of our client’s stand that third-party firms are not party to the probate suit. It’s a victory for corporate democracy, given the results of the polls taken at AGMs clearly show what 99 per cent of shareholders want.”

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A spokesperson from the Birla family said the divisional Bench order had directed the Probate Court to consider and decide all aspects of the matter after giving opportunity to these firms.

The court order has lent yet another twist to the decade-old dispute over control of the MP Birla group. It started in 1999, over the purported will of Priyamvada Birla, bequeathing her entire estate to Rajendra Singh Lodha, and is in the last leg with probate proceedings underway.

First Published: Tue, May 05 2020. 15:44 IST