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War for Herbertsons escalates: Mallya, Chhabria groups make AGM 'eventful'

The battle for the control of liquor major Herbertsons Limited turned bitter at the 61st annual general meeting of the company.

The Kishore Chabbria group set about the process of removing Herbertsons Chairman Vijay Mallya, Managing Director S D Lalla and four other directors from the board.

Later, speaking to the media, Chabbria claimed that he had a majority stake in Herbertsons, even as shareholders were casting their votes on resolutions moved by the Chabbria group to remove Mallya and others.

''We own over 50 per cent of shares in Herbertsons, out of which 48 per cent is held by my uncle Madan D Chabbria,'' said Chabbria.

Later, Mallya rebuffed the claims saying that he would not like to comment as the matter was sub judice. The company chairman did not rule out negotiating with the other side to buy out their stake, but categorically stated that he would not sell his stake.

With both the sides sticking to their guns, all eyes are now set on the Bombay high court, which will examine the votes and proxies at the next hearing scheduled for February 9, 1999.

It may be recalled that an associate of Mallya, Sreenivasulu Reddy had moved the court and filed a petition that the shares acquired by Chabbria beyond the 26 per cent stake held by him eariler was not in conformity of the Securities and Exchange Board of India guidelines on takeover.

Votes and proxies cast by persons/companies of the Chabbria camp have been placed in separate covers.

However, three resolutions pertaining to approval of balance sheet and profit and loss account, declaration of dividend and fixing remuneration for the auditors were passed at the AGM by the shareholders by way of show of hands.

At the AGM, tempers ran high as a number of shareholders supporting Mallya castigated the Chabbria group. They questioned the validity of the closely-held companies of Chabbria, saying that they were not entitled to participate at the AGM.

They also raised the issue of the alleged mismanagement and misappropriation in BDA Limited, a 100 per cent subsidiary of Herbertsons headed by Chabbria.

Shareholders queried about a Rs 70 million unsecured loan, which has not been recovered as yet. The auditors have qualified this transaction in the annual report of BDA, offering no comments.

Responding to Mallya group's charges on BDA, Chabbria told the media that the AGM was convened to discuss the accounts of Herbertsons and not BDA.

Ridiculing the cacophony at the AGM, he remarked, ''They (shareholders) were just playing to the gallery.''

He informed that a defamation notice had been sent to Mallya asking him to apologise within 15 days for reported allegations made by him (Mallya) in a letter to the Securities and Exchange Board of India chairman.

The notice was sent two weeks back and Chabbria informed that if Mallya does not respond, he would take legal action.

In a bid to control the company, both sides do not seem to be leaving any stone unturned. Mallya does not rule out a buyback of shares, while Chabbria says that he has an ''open mind'' to make an open offer.

Chhabria said that he would need a green signal from the SEBI to make an open offer. He opined that the SEBI would not nullify transactions undertaken by him and his associates to increase their stake at Herbertsons.

The Chhabria group proposed the names of their nominees to replace the existing Herbertsons directors. The directors apart from Mallya and Lulla, who are proposed to be removed are S S Gandhi, S K Bishwal, S R Gupta, C L Jain and V K Gupta.

Wary about adverse publicity, the bitter tussle between the Mallya and Chhabria groups would receive, Herbertsons' officials did not allow media persons to enter the auditorium of the Y B Chavan Prathishtan in south Bombay, venue of the 61st annual general meeting of the company.

The media had to enter the building through the backdoor unofficially.

Even then, some journalists who had managed to sneak into the auditorium were escorted out. The media cornered company officials, stating that this sort of incident has never taken place before.

Journalists were eventually allowed to go inside the auditorium. Later, at the AGM, Mallya quipped, ''The press has finally entered.''

UNI

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