Charges against Apollo Tyres may fizzle out
S Kalyana Ramanathan / Chennai November 06, 2007
Allegations of mismanagement at Apollo Tyres made by Narinder Jeet Kanwar against his elder brother, Onkar Singh Kanwar, might not hold in the Company Law Board (CLB) because the younger brother was not a shareholder in the company, said Apollo Tyres officials.
“Narinder Jeet Kanwar has no stake in the company,” said a company official, adding that he was, therefore, not in a position to take up the issue before the CLB.
“The petitioner or petitioners as a group must hold at least a 10 per cent stake in the company for the CLB to accept the petition. It is not an easy process, unless this 10 per cent stake is held by a person,” said M R Venkatesh, a Chennai-based company law expert.
In a family partition that took place many years ago, Onkar Singh Kanwar had got control of Apollo Tyres, a leading producer of tyres.
Last Friday, Narinder Jeet Kanwar moved the CLB in Chennai, seeking an investigation into manipulation, fraud and insider trading by his brother to acquire a controlling stake in the company.
Meanwhile, the All India Tyre Dealers Federation (AITDF) is expected to join the fray, alleging trade malpractices by the company’s management. A Delhi-based AITDF member said today that a petition was being filed with the CLB in Chennai.
“Our petition is not intended to support Narinder Jeet Kanwar. We are merely using the opportunity to enable the CLB hear our woes too,” said the member.
He added that the trade body was contemplating sending a copy of this petition to the economic offences wing of the ministry of finance under the Union government.
The AITDF has claimed that Apollo Tyres has created a creamy layer among the dealer network, whereby 25-30 per cent of its businesses are distributed among 200-300 dealers, while the company’s sales network is spread across 4,500 dealers in the country.
Meanwhile, Apollo Tyres today issued a media statement contesting the validity of the petition. “We wish to clarify that the reference to the petition that is made in the report has not even been admitted by the CLB’s additional principal bench in Chennai. The very maintainability of the same has been challenged by the company,” it said.
The Apollo Tyres scrip today closed at Rs 36.70 on the National Stock Exchange, which was 3.29 per cent lower than the previous closing price of Rs 37.95.
WAR OF WORDS
# The petitioner or petitioners as a group must hold at least a 10 per cent stake in the company for the CLB to accept the petition
# The All India Tyre Dealers Federation (AITDF) is expected to join the fray, alleging trade malpractices by the company’s management
# Apollo Tyres today issued a media statement contesting the validity of the petition