The Hindu Business Line : Shareholders fault SRP Tools promoters for inadequate disclosure

A GROUP of shareholders have faulted the promoters of SRP Tools for inadequate disclosure in the offer document for buy-back of shares at the time of delisting of the company's shares from the Madras Stock Exchange.

They argued during the course of the company's AGM, which lasted over five hours, that the promoters should have disclosed in the offer document the fact that the promoters themselves were in talks with Mitsubishi Heavy Industries Ltd of Japan at that time for sale of their own stake in the company.

These shareholders contended that the promoters used the prospective delisting of shares as a pretext to buy shares from the public shareholders at Rs 35 and later sold them along with their initial stake for a higher but undisclosed price to the Japanese major. The current Japanese management gave no reply when asked why this "material fact" was not mentioned in the promoters' offer letter.

They also refused to disclose the price at which Mitsubishi bought the shares from the original promoters, on the grounds that the information was confidential.

Mr S. Rm. Pl. Subramanian, one of the original promoters and Chairman and Managing Director of the company then, who was present at the AGM, refused to comment despite requests from Business Line to present his side of the story.

Mr J. Sridhar, Director (Finance and Company Secretary), told Business Line that everything had been done in accordance with the law and that the original promoters were technically correct in what they did.

He added that the shareholders who did not agree were free to take any legal action.

Company law experts concur with Mr Sridhar that the original promoters of the company are on the right side of the law, albeit in a strict legal sense. Observing that the first promoters had been "enriched", Mr S. Sundar, a company secretary, said that they were legally correct.

According to him, the SEBI should bring in a rule disallowing any change in management of a company that has initiated delisting proceedings for at least one year after the commencement of such proceedings. Meanwhile, the company has proposed to change its name to Mitsubishi Heavy Industries India Precision Tools Ltd.

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Shareholders fault SRP Tools promoters for inadequate disclosure