In a relief to over 8,000 investors, the Bombay High Court has appointed Ernst & Young as independent valuers to evaluate shares of Cadbury India whose promoters have proposed to acquire 2.5 per cent minority shareholding.
Hearing an intervention application filed by Investors Grievances Forum (IGF), a body for protection of small investors, Justice S J Kathawala on April 15 asked Ernst & Young to independently value the shares of Cadbury India and submit a report in a sealed cover within six weeks.
Cadbury shareholders opposed valuation of shares based on the report prepared by Independent Valuers M/s Bansi Mehta and Co and M/s SSPA and Co which arrived at Rs 1,340 per share, IGF Counsels Chandu Mehta and Darshan Mehta said.
Cadbury’s Counsel, Janak Dwarkadas, said the exercise of valuation of Cadbury shares by M/s Bansi Mehta and Co and M/s SSPA and Co was in conformity with the law laid down by the apex Court, pertaining to value of shares, in many judgements.
However, the company is agreeable to get the valuation done by an independent valuer appointed by the Court. But this valuation should be treated as final and binding on all the objectors and shareholders of Cadbury who would not be allowed to pursue their objections later, he said.
Cadbury’s counsel Dwarkadas submitted that an assurance from the court to make valuer’s report binding on shareholders was necessary to avoid the matter from getting delayed and also not to cause any prejudice to the company.
The objectors agreed to the suggestion of the Cadbury’s counsel with a caveat that they would be free to interfere with the report in the event they find any grave infirmity in the valuation report obtained from the independent valuer.
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Appointing Ernst & Young as independent valuers, the judge ordered that fresh valuation will be as on appointed date and shall be based on the unaudited balance sheet as on July 31, 2009, on the same material as provided to earlier valuers.
Accordingly, the company-appointed valuers were asked to hand over the material relied upon them in a sealed cover to the court appointed valuer.
The objectors have been allowed to file their objections to the court appointed valuer by April 29 which shall be considered by the latter.
The court further ruled that the valuation by Ernst & Young shall be final and binding on all the objectors and shareholders, subject to the caveat.