In today’s briefing:
- KRBL Ltd- Not Just Another Resignation
- Many Companies that Have Seen Their Founding Family’s Stake Decline but Retain CEO Have Challenges
KRBL Ltd- Not Just Another Resignation
- Shares of KRBL Ltd (KRB IN) dropped as much as 12% intraday on September 15th, owing to resignation of Independent Director, Mr. Anil Kumar Chaudhary.
- His letter highlights suppression of dissent, lack of transparency in decision-making, questionable receivable write-offs, and CSR mismanagement among several governance concerns currently at the company.
- When triangulated with auditor qualifications, committee overlaps, CSR lapses, frequent Board/CS exits, and major write off, a pattern of weak checks and board oversight emerges.
Many Companies that Have Seen Their Founding Family’s Stake Decline but Retain CEO Have Challenges
- Companies competing in global market are often compared in profitability and practices with global competitors, so they would have moved to reduce cross-shareholdings earlier than companies focused on domestic market.
- There is little improvement in capital profitability, but lower number of cross-held shares will reduce the number of companies whose proxy votings are influenced by cross-shareholdings, which will improve governance.
- Companies that maintain top management despite decline in the founding family’s stake tend to be targets of activist investors because they have problems with both corporate governance and capital profitability.
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