The move by the management of Andrew Yule Company Ltd (AYCL), a loss making public sector unit, to gain control over Disergarh Power Supply Co Ltd (DPSL) through Descon Pvt Ltd has come a cropper following the board of Descon turning down the offer from AYCL to acquire a 26 per cent stake.
Descon, a privately held company in which 80 per cent of the shares are owned by the employees itself, holds 30 per cent stake in DPSL, a Rs 250 crore profit making power company. DPSL, in turn, holds 20 per cent in Descon.
A 26 per cent stake in Descon would mean for AYCL a management stake in DPSL.
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Andrew Yule offered to take over 26 per cent in Descon at Rs 10 per share where as the net asset value of Descon at present is Rs 300. Attempts to contact AYCL officials proved futile.
A chunk of the salaries is financed out of service charges paid by Descon and DPSL to AYCL, as they are located at AYCL office. As much as 58 per cent of the salary expenses of AYCL is paid out of the service charges paid by DPSL and Descon to AYCL.
Employees of AYCL fear that if the management stake is transferred to the later, the company might turn sick as AYCL management has a past history of taking over profitable companies and making them sick. " Yule Finance & Leasing Company is one such example," said the assistant secretary of Andrew Yule & Co Ltd and its Group Workmen's Union. "We fear that Descon and DPSL might also turn sick if taken over by AYCL," he said. "This in turn will affect us as our salaries are paid out of service charges paid by these two companies," he lamented.
Employees allege that the management of AYCL has been pressurising employee-shareholders of the company to surrender their proxies in favour of the management just before Descon's annual general meeting. This is being done to block resolutions proposed by the Descon Board at the AGM, they allege. "They have also gone to the extent of putting pressure on Descon employees and snatch off their voting rights," he said.
Descon has offered 26 per cent to AYCL in 1995 when the company was floated. However, it declined to take a stake in the company. "Now that the company is turned cash rich and profitable, AYCL is keen on taking over both the companies and siphon off funds," said employees from the company.