The financial institutions (FIs) have decided to increase their presence on the board of directors of Dunlop India from one to two. A source said they have written to the company a couple of weeks back informing them of their decision. The company has neither acknowledged their letter nor responded to their request, the source added.
The Dunlop spokesperson told Business Standard, "We have not received any communication from the FIs in this regard. At present only the Life Insurance Corporation (LIC) has a nominee on the board and we are not aware of any move on part of the institutions to increase their presence on the board of the company."
The FIs reportedly wish to play a more proactive role on the board of the company.
The insurance companies, LIC & General Insurance Corporation (GIC), and the Unit Trust of India (UTI) hold 33 per cent stake in the company. While LIC holds 21 per cent, the other two hold six per cent each.
"While LIC already has a nominee on the board of Dunlop, the decision to increase our presence should be seen in light of the problems facing the group," said an official with one of the institutions.
The company need not accede to the request made by the FIs and could ask them to wait till the annual general meeting, where they can get themselves elected to the board, he added.
It is significant the decision to increase their presence on the Dunlop board comes at a time when the debate over corporate governance and responsibility of nominee directors has come under fresh scrutiny in the wake of the ITC Ltd embroglio.
Dunlops net profit plummeted from Rs 39 crore in 1995-96 to Rs 5.14 crore in 1996-97. In fact, the company posted a loss of Rs 13.38 crore in the second half of the last fiscal.
The company with a paid-up capital of Rs 18.99 crore and reserves to the tune of Rs 125.94 crore, has announced a dividend of 10 per cent for the 1996-97 financial year.
