Danone may take up minority investors' issue

Britannia board meeting on May 29.

French dairy major Danone is expected to raise the charges made by minority shareholders against Britannia, at the latter's May 29 board meeting.

Insiders said the agenda would not be restricted to the financial year accounts alone as it was held in the backdrop of an escalating fight between the Wadias and the co-promoters.

The 14-member board consists of four nominees each from Danone and the Wadias and five independent directors. Nusli Wadia is the chairman of the company.

Meanwhile, hectic negotiations are on between the Wadias and Danone on how to sort out Danone's investment in Bangalore-based nutraceutical firm Avesthagen and the return of the Tiger brand from various international markets to Britannia. Both the partners hold 50 per cent stake in Associated Biscuits which, in turn, holds 50 per cent stake in Britannia.

Danone had sought information directly from Britannia's minority shareholders, who alleged asset stripping in Britannia in the last few years - a charge denied by the Britannia's management. In an e-mail to minority shareholders and former employees of the company, Danone said it would like to know the answers given by Britannia on whatever queries the small shareholders have on asset stripping and the action taken by the Britannia management.

"As you can imagine, we always read carefully your messages and are very interested to know about the answers you are getting from the company. As Danone is not a direct shareholder of the company, it is clear that we are not in a position to investigate such points you are mentioning," Danone wrote to a small shareholder who made the charges in a letter to the French firm. Danone then advised the shareholder to take the issue to the audit committee, led by independent director Nimesh Kampani. "I am not an expert of Indian corporate law but I wonder if the only corporate body to be questioned is the company secretary or if you can also address your concerns to the chairman of the Audit Committee," Danone's Chief Risk Officer Jean-Claude Horen wrote to the shareholders who alleged that Britannia was selling and leasing properties to and from various Wadia companies at below or inflated prices.

Shareholders told Business Standard that even after a written communication to Kampani in December last year, they were yet to receive any acknowledgement from the audit committee.

When contacted, a Britannia spokesperson said: "The company is governed by the applicable laws and has the highest governance standards, including an active audit committee (which includes four independent directors), and a reputed external firm of internal auditors."

According to him, all property related transactions are approved by a committee of the board and ratified by the board itself. As required by the law, all related party transactions are disclosed appropriately to the shareholders.

"Obviously, shareholders are not privy to the information related to the day-to"�day managerial decisions, nor can the company can respond to individual queries of 30,000 shareholders on operational details," he said.

The Wadia group has sued Danone on its investment in Avesthagen, saying the Bangalore firm competes with Britannia's product lines. The Wadia group even took the matter to the commerce ministry, saying that Danone's investment in Avesthagen violates the Press Note 1 notification of the government.