Pact On New Team At Asian Paints

Ashwin Choksi to become chairman; Rajagopalachari to be appointed MD

The Danis, the Choksis and the Vakils the three remaining promoters of Asian Paints have reached an agreement on a new management structure to break the 11-day-old impasse created by managing director Atul Chokseys decision to sever links with the Mumbai-based paints major.

The three promoters have called a board meeting on August 19 to approve a new four-tier structure to accommodate all the factions and manage the company affairs. The finalisation of the new deal would effectively mean that Atul Choksey would have no further role to play in the company.

 

A professional outside the three families is being inducted as managing director and two new posts of vice-chairman and deputy managing director are being created.

Ashwin Choksi, currently managing director will be elevated as chairman, while Ashwin Dani will be made vice-chairman.

K Rajagopalachari, who is at present the whole-time director is being made the managing director while Abhay Vakil, another of the promoters, is being appointed as the deputy managing director.

The board will meet and approve these appointments on August 19 in Mumbai.

When contacted, one of the promoters refused to comment, but added that the board is likely to meet the following week.

Top market sources said the move is anchored by twin objectives. Firstly, to accommodate all three factions to prevent future squabbling. Secondly, to give the company a professional image by inducting K Rajagopalachari as managing director. Rajagopalachari is at present the whole-time director, partly in charge of the companys overseas businesses in the Pacific and Australia.

With Atul Choksey set to pull out, the remaining promoters have decided that they require a professional at the helm to quell perceptions that Chokseys departure will spell doom for the company.

Following Chokseys announcement, the Asian Paints scrip on the bourses has plunged 20 per cent since last Monday.

Yesterday, the stock market reacted nervously to reports of Morgan Stanleys decision to back out of the Rs 127-crore Asian Paints deal. Trading sentiments slumped and the scrip lost over 6.31 per cent at the National Stock Exchange (NSE) to close at 298.55 over the previous close of Rs 318.65.

On the Bombay Stock Exchange (BSE), the scrip closed at Rs 305 against the previous close of Rs 315. The scrip dipped to an intra-day low of Rs 296.35 at the NSE and, on the BSE, it touched an intra-day low of Rs 290.25.

The total trading turnover at this counter at the NSE touched Rs 3.72 crore, while the turnover at the BSE touched Rs 3.44 crore.

Asian Paints has a 12-member board, including the late Champaklal H Choksey, and his son, Atul C Choksey. Ashwin Choksi is the managing director along with Atul Choksey, while the other promoters are whole-time directors.

The Vakils are represented on the board by Abhay Vakil and Amar Vakil.