Gautam Singhania faces opposition over Raymond Lifestyle's chairman role

Two advisory firms have urged shareholders to reject Gautam Singhania's appointment as executive chairperson of Raymond Lifestyle, citing concerns over governance, transparency, and reputational risks

Gautam Singhania’s proposed appointment as executive chairperson of Raymond Lifestyle has drawn sharp criticism from corporate governance watchdogs. Two corporate governance advisory firms, Empowerment Services (SES) and Institutional Investor Advisory Services India (IiAS) have urged shareholders to reject the move, citing concerns over governance, transparency, and reputational risks, according to a report by The Economic Times. 

 

Their recommendations come at a crucial time, when shareholders are currently voting on the proposal, which seeks to formalise Singhania’s role for five years starting September 1, 2024.

 

SES raises governance concerns under Gautam Singhania 

SES highlighted that Singhania’s appointment was announced before receiving formal approval from the company’s board. It also expressed reservations about his simultaneous full-time roles in Raymond and Raymond Lifestyle, the lack of an absolute cap on his variable pay and commission, and unclear restructuring plans. SES maintains that no individual should hold more than one full-time position unless the roles are in closely aligned businesses.

 

 

The e-voting process, which started on November 5, will continue until December 4. Shareholders are being asked to approve Singhania’s tenure, which is set to span from September 1, 2024, to August 31, 2029. However, concerns raised by proxy advisory firms have cast a shadow over the proposal.

 

Raymond Lifestyle, which was separately listed following the demerger of Raymond’s lifestyle business on September 5, opened at Rs 2,850. Since then, its stock has dropped by 28.5 per cent, closing at Rs 2,026 on the BSE on Monday.

 

IiAS, in its analysis, criticised the lack of detail in the proposed remuneration structure, noting the absence of a maximum cap and performance-linked metrics for commission payouts. The advisory firm also flagged the absence of malus or clawback clauses, making the pay package appear “open-ended.”

 

IiAS flags ‘reputational risks’ linked to Singhania 

IiAS further underscored the reputational challenges linked to Singhania. It pointed out that he is undergoing divorce proceedings, during which his wife, Nawaz Modi, has accused him of domestic violence and misuse of company funds for personal gains. According to IiAS, the board has not updated shareholders on these allegations since its last statement in December 2023 and has not clarified whether an independent investigation has been conducted.

 

Raymond real estate demerger gets NOC 

In a separate development, Raymond Ltd announced progress on the demerger of its real estate division last week. The company recently received no-objection certificates from the Bombay Stock Exchange and the National Stock Exchange. Following necessary approvals, the new entity, Raymond Realty, will be listed on both exchanges.

 

This restructuring, approved by the board in July 2024, aims to consolidate the group’s real estate business under a single entity. The company hopes the move will unlock growth potential and attract fresh investments and strategic partnerships in the real estate segment.