Shares of Finolex Cables jump over 6% after Supreme Court judgement

Shares of Finolex Cables jumped more than 6 per cent on Thursday after the Supreme Court allowed Prakash Chhabria-led Orbit Electricals to vote at the annual general meeting (AGM) of Finolex Cables to be held on Friday.

Shares of the company last traded at Rs 1,194, up 6.6 per cent over its previous day's close. Experts said traders are lapping up the stock in anticipation of a change in guard at the company.

The Supreme Court has said that any action on resolution No 4 (pertaining to the appointment of Deepak Chhabria as executive chairperson) shall be subject to the outcome of the appeal pending before the National Company Law Appellate Tribunal (NCLAT).

 

The Supreme Court order assumes importance given the dispute between cousins Prakash and Deepak, who are accusing each other of wresting control of Finolex Cables.

Prakash-led Orbit Electricals is the biggest shareholder in Finolex Cables, holding a 30.75 per cent stake.

"If Orbit is allowed to vote, it could lead to the ouster of Deepak Chhabria as the chairman of the company given his low shareholding. One also has to see how the court rulings are in this matter," said an analyst.

As per a report by InGovern, certain family arrangements, which are now sub judice, prevent the use of voting rights to oust Deepak from Finolex Cables and Prakash from Finolex Industries.

In a note last week, InGovern sought deferment of voting on two resolutions floated by Finolex Cables. These resolutions pertain to the re-appointment of Deepak Chhabria as executive chairman for five years (item No 4) and payment of commission to non-executive directors (item No 6).

Finolex Cables issued an original notice to its shareholders on September 4 — 25 days ahead of the AGM. However, it issued a corrigendum to the notice of the AGM on September 16.

"Given that 13 days is a shorter notice for a significant addition in item 4 to the notice, many shareholders would not have had the time to study it. The law requires 21 clear days from the date of the issue of the amended notice," InGovern said in a note.

Out of the six resolutions floated by Finolex Cables, InGovern has recommended a 'for' vote on the other four.