Nandas revive row over shares

Anil writes letter ahead of board meeting today

Anil and Rajan Nanda have once again crossed swords with the former dubbing as "illegal" the move by the Escorts group to pledge shares of Escorts Heart Institute and Research Centre (EHIRC) for mopping up Rs 100 crore.

Protesting the decision to pledge 16 lakh shares of (EHIRC) Anil said, "Escorts Limited is virtually making a sale and destroying the purpose and status of the heart institute as a public charitable institution."

In a letter to Escorts' company secretary, ahead of the board meeting on Wednesday, Anil said pledging of 16 lakh shares to the Life Insurance Corporation (LIC) to raise Rs 100 crore was "wholly improper and illegal."

Such a step would go against an earlier decision to register EHIRC as a non-profit charitable company under Section 25 of the Companies Act, 1956, he said.

While Anil did not comment on his latest move, his elder brother Rajan could not be contacted for details.

Confirming the board meeting tomorrow, an Escorts official said that the borrowing committee had approved the proposal for raising resources by pledging assets and shares and the decision was being put before the board for ratification.

Although he did not comment directly on Anil's letter, the spokesman said the 11-member board would consider the issue, and once it is passed by majority "we will go ahead" with the normal course of borrowing to augment the group's long-term resources."

In the letter Anil said, "In the above circumstances, the present proposal to pledge these shares for raising a Rs 100 crore term loan is not only against our commitment to preserve the public charitable status of EHIRC but is also wholly improper and illegal... I cannot agree to this position at all."

He said the move was against the earlier settlement wherein the company dropped plans to sell a part of these shares to a strategic investor.

"These shares have a paid up value of only Rs 1.60 crore. If these are held out as a security for a loan of Rs 100 crore, it can only be on the basis that either we do not want to register EHIRC as a Section 25 company anymore or that we are not disclosing to LIC our commitment to do so," Anil said.

"I hope the board will give up this proposal and proceed with the registration of EHIRC as a Section 25 company. If, however, the board decides to proceed otherwise, please do make sure that my dissent is noted and the contents of this letter are fully recorded in the relevant minutes of the board meeting," he said.

Escorts ltd own 80 per cent stake in ehirc while ten per cent is held by rajan nanda and the remaining ten per cent by heart surgeon naresh trehan.