 "Tamilnad Mercantile Bank's board elections set for a tough contest")
With the elections to select its Board of Directors scheduled after five years, Tamilnad Mercantile Bank Ltd (TMB), a lender promoted by the Nadar community, will see various groups, considered strong in the business world, including businessman S Vaikundarajan, having joined the race, sources say.
According to a notice of candidature of directors, at the 93rd annual general meeting (AGM), which was published in a newspaper recently, Vaikundarajan, who heads the VV Minerals and other companies, VVDN Vikraman, who heads the VVD Group and a member from the Adityan faction have proposed to contest in the election to the Board of Directors.
The AGM, which has not been conducted for several years due to legal disputes related to the control of the bank, is scheduled to take place on January 29, with dividend and initial public offering (IPO) plans on the agenda.
A faction of shareholders in the bank have raised allegations that Vaikundarajan, who has 0.54% share directly in the bank, and controls around 4-6% stake in the company, is trying to take over the control of the lender. Out of 24 contestants proposed to participate in the election, four, including Vaikundarajan, his brother S Jagatheesan, his relative PC Asok Kumar and his associate D Gnanaraj are contesting the election and their entry into the board would not be good for the bank, they allege. VW Minerals and its promoters have faced allegations of illegal mining, a claim which they have denied, terming it baseless.
As per TMB byelaws, anyone having 500 shares can become a director, though it is exempted in the case of professionals, persons with agriculture and SSI background.
Vaikundarajan is also expected to be supported by Dakshina Nadar Sangam and some other factions of the Nadar community who hold around 5-10% of the shares in the bank. He is also trying to take over the shares from FIIs, which bought stake from businessman C Sivasankaran, who in turn acquired stake when Essar Group sold their stake in the bank, some shareholders have alleged. As reported earlier, the transaction to FIIs has also attracted a show-cause notice from the Enforcement Directorate to Tamilnad Mercantile Bank (TMB) and Standard Chartered Bank, among others, for contravention of the Foreign Exchange Management Act (Fema) 1999.
The bank, which has a majority of small shareholders, the major shareholders include Adityan family, which holds a total of around 7% shares (of which 5% share holding is under dispute), Ayyanar Coffee group which holds around four %, VVD Group which holds around three percent, MGM Maran who holds around five % and Pioneer Group which holds around four %. Around 24 % of the shareholding is with the foreign institutional investors, which is the significant portion of the total shareholding.
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Major shareholders in the bank include the Adityan family, which holds a total of around 7% (of which 5% holding is under dispute), Ayyanar Coffee Group, which holds around 4%, VVD Group, which holds around 3%, MGM Maran, who holds around 5%, and Pioneer Group, which holds around 4%. Meanwhile, around 24 % of the shareholding is with the foreign institutional investors (FIIs), which is the significant portion of the total shareholding.
The bank has 2.8 lakh shares, and for a face value of Rs 10 for each share, the book value is around Rs 91,000 and the ongoing price in the market is around Rs 70,000 per share.
The lender is all set to hold six AGMs on January 29, 2016 due to the five years in between that didn't see an AGM. The 94-year-old Thoothkudi-based bank held its 87th AGM
in January 2010. The 88th AGM, scheduled on June 15, 2011, was injuncted by an order of the Madras High Court. The court had later vacated the said order of injunction and directed the Bank to convene and hold all the six AGMs —88th to 93rd AGM on a single day within 70 days from the date of the order of the court.
Some of the important proposals including the bank’s initial public offering plans were held back since the bank could not hold its annual general meeting (AGM). Bank caught in a legal battles, which are fought by its shareholders at various Courts.
The AGM is expected to decide on issuing bonus shares of 500 shares to every share in the company and to offer a dividend of Rs 2,350 for every share with face value of Rs 10. These measures are expected to help to enhance the capital and bring down the valuations to make the bank ready for public listing, to bring in transparency.
TMB reported a 27 % growth in net profit in 2014-2015 at Rs 379.40 crore as compared to Rs 300.77 crore, a year ago. Total business of the bank rose by 12.3% to Rs 49,985 crore in 2014-15. Advances increased by 12.79 % to Rs 19,335.95 crore from Rs 17,143.85 crore, while deposits increased by 13.27 % to Rs 25,649.86 crore from Rs 22,645.68
crore. The bank has brought the net NPA level to 0.67 % from 1.22 %. In quantum wise it dropped to Rs 128.96 crore from Rs 209.32 crore. Meanwhile, gross NPAs dropped to 1.63% from 2.46 %. In absolute terms it dropped to Rs 318.68 crore from Rs 428.02 crore.