VEDANTA SAGA continues-- Open Letter to Lalita Gupte

SMALL INVESTORS’ WELFARE ASSOCIATION

      Email : SirenBajao@gmail.com  

Madam,

We were shocked to learn of your resignation from Vedanta Limited as Independent Director and Chairman of the Audit Committee.

 II. The Company release attributed this to “balance your work and other family commitments”. We find this hard to digest, considering the following:

(a)     In FY 19-20, there were just 7 meetings of Vedanta Board and Audit Committee

(b)     The Company was paying you an excellent sum of Rs. 85.50 Lacs

(b)    You have not resigned from any other company

(c)    You were only nine months away from completing your second and final term as Independent Director of Vedanta

The above suggests that there is more to your resignation than meets the eye. This kind of act of kicking such a hefty sum for relatively low amount of work is only done when conscience comes into play and when things make a person uncomfortable.

III. As Independent Director, your primary fiduciary duty was to the minority shareholders and you owe it to us to tell us the real reason for your resignation, else your sacrifice will go in vain. You have alert Finance Ministry, MCA, SEBI, Stock Exchanges and all the small shareholders. You have to also alert the Big Daddy –LIC that the company which they valued at 320 per share is almost at 70% discount because of the poor corporate governance.

IV. Was it the $ 956 Mn inter-corporate loan by Company to its parent company ? If so, was it that:

(a)    It was a FEMA violation to give an inter-company loan to below investment grade company overseas?

(b)    It was a diversion of funds from a public company to the promoter’s hands?

(c)    It was given at a nominal 7%pa when G-Sec rates are at 5.85%pa (while the promoter borrowed at 13%pa when 12m USD Libor is at 0.33%) i.e. given at rate other than arm’s length?

 

Even the auditors have qualified their audit report stating that there are “inherent uncertainties caused by the fact that the parent company has reported a material uncertainty relating to its going concern…” and hence expressed their inability to comment on the fair value of the loan asset. In simple words, the loan may never come back.

V. Was it that the Company violated its own Board approved Dividend Policy of upstreaming entire dividend of HZL to its shareholders?  

So far, Vedanta has up-streamed only 22% of the dividend received from HZL.  Vedanta Chairman Anil Agarwal publicly calls dividend pay-out its 50% public shareholders, as Leakage. To stop this Leakage and please the Chairman, the Vedanta Ltd Board has found a way to give HZL and Vedanta money to its promoters via inter-corporate loans?

 

VI. Were there other issues of compliance, governance and audit that compelled you to resign?

Or were you asked to resign?

Or did you resign due to other differences?

Surely, being an independent director for over 5 years and the Chairman of Audit Committee, you would have insights into all the wrongdoings of the company.

 

VII. Madam, you were our representative on the Board, you owe it to us. Please give us the true reasons for your resignation. We have stopped expecting anything from other so called Independent (sic) Directors. No so called independent director of the company, has your spine and uprightness to let go such huge personal benefits that too post retirement.

We were assured  that with Mrs. Lalita Gupte on the Board, she will protect our interest, she is the torch bearer of corporate governance.

Your silent resignation will only propel the Vedanta promoters and its Board to even more blatantly violate corporate governance norms.

Will  your conscience allow you to let your massive sacrifice go to waste without achieving the result, it set out to achieve? Protection of small shareholders can only be achieved if you make the public announcement of your reason for resignation.  

 Kahlil Gibran once said; sometimes in life, it becomes your duty to help remove the stone over which you stumbled, so others don’t. In such situations, keeping silent is not an option. For a conscientious person like you, it may actually weigh heavily on you.

 For Small Investors' Welfare Association