Raymond Chairman and Managing Director (CMD) Gautam Singhania's separation from his estranged wife, Nawaz Modi, has taken a contentious turn, raising concerns among the company's shareholders.
While Gautam Singhania has chosen not to comment on the ongoing family dispute, stating a desire to uphold his family's dignity, Nawaz Modi has been outspoken about the matter since Singhania publicly announced that he and his wife have parted ways after 32 years.
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In a recent interview with India Today TV, she made a series of sensational claims about Gautam Singhania, alleging instances of physical assault and recounting an incident where he allegedly forced her to climb Tirupati steps without food and water.
Nawaz Modi also said that Gautam Singhania had declined a settlement offer she had proposed to him, reportedly involving 75 per cent of his $1.4 billion net worth.
However, Modi claimed that Gautam Singhania declined her offer, saying “do what you want”. These developments suggest that the Gautam Singhania-Nawaz Modi separation proceedings might be prolonged, causing unease among shareholders.
Raymond shares facing pressure
Although Singhania communicated internally to the board members and employees that business is as usual at Raymond and flourishing, the company's share price has experienced a significant decline.
Over the past five trading sessions, the shares have fallen nearly 10.5 per cent and 12 per cent in a month, indicating that the allegations and settlement demands have negatively impacted the share price, causing distress for shareholders.
On the 11th consecutive day of decline, Raymond's share price fell by 2.20 per cent today. This decline follows a call from Institutional Investor Advisory Services (IiAS) for independent directors to probe assault allegations against CMD Gautam Singhania.
IiAS urged the independent directors to undertake an independent investigation into the allegations, addressing concerns and outlining a course of action. "In the interest of the company and safeguard the interests of a larger set of stakeholders, we urge you to undertake an independent investigation into the allegations of both, assault and CEO excesses," IIAS said.
Will messy divorce mess up Raymond's valuation?
JN Gupta, a former Securities and Exchange Board of India (Sebi) executive director who runs proxy advisory firm Stakehoder Empowerment Services, told Business Today that there will be an impact on the business, if there is no amicable settlement in sight and the battle goes to the court.
“If there is no amicable settlement in sight, and the battle heads to the courts, there will be an impact on the business,” Gupta said.
Meanwhile, InGovern Research Services’ Shriram Subramanian told Business Today that these developments are likely to impact minority shareholders. “I don’t see them having to rush to buy the stock at this point,” he added.
Some market analysts believe that the ongoing proceedings could negatively impact shareholder confidence, and that the matter is being keenly watched.
Shriram Subramanian explained that market watchers will keep a track on how the wealth of the promoter family is divided as part of the settlement proceedings. “If she demands 75 per cent, that’s a big number. There will be implications on the company,” he told the business daily.
He, however, added that at this point InGovern would not be issuing any advisory since there is no corporate event which has taken place.
Vijaypat Singhania, Raymond's former chairman emeritus and Gautam Singhania's father, stated in a recent interview with Business Today that the separation might have an impact depending on how shareholders, bankers, and stakeholders perceive the situation.
"Raymond has a very large number of mature, logical shareholders. They can think for themselves. If they see something bad, they react quickly,” Vijaypat Singhania said.
"Raymond's name will ultimately depend on how a larger number of shareholders, bankers, buyers, sellers look at it. There are two things in it. One is how they see the issue itself and how it will affect them and they will also look at Raymond's performance and they are not necessarily the same. So, I think it's a very difficult question to answer whether it will affect the Raymond name,” he added.
Will Gautam Singhania, Nawaz Modi's messy divorce mess up Raymond’s market value? - India Today
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