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The management of Vadodara-based Jyoti Ltd on Monday approached the Supreme Court to avert a possible hostile takeover by Mumbai-based broker Bharat Patel and his associate investors.
The management will also approach the Securities and Exchange Board of India against Patel’s move to unseat the promoters and the board members using FIIs to circumvent the SEBI Takeover Code.
Patel, along with Mumbai-based Finquest Financial Solutions Pvt Ltd, had issued notice proposing to convene an extraordinary general meeting (EGM) on March 17 of shareholders of Jyoti Ltd seeking removal of the board of directors, including Rahul Amin, CMD.
‘Illegal’ method Jyoti had approached a court in Vadodara to counter Patel’s plan to convene the EGM. The lower court did not allow Patel to convene the EGM.
Following this, Patel had approached the Gujarat High Court, which, in a February 19 order, allowed Patel to go ahead with the plan to convene the EGM.
“He (Patel) is trying to illegally taking control of the management of the company. He had issued a notice seeking to convene the EGM on March 17. We have approached the Supreme Court to stop the EGM from taking place,” Amin told BusinessLine .
The promoters, including Amin, hold 32.66 per cent in the company, while Patel and his associates are believed to hold over 40 per cent stake.
BSE-listed Jyoti is a turn-key solutions provider set up in 1943. The Jyoti management has alleged Patel of blackmailing the “promoters to pay a much higher premium for his holding or get thrown out from the management.”
According to sources, Patel, who had picked up about 11 per cent stake in the company in 2010, was given a berth in the board of directors.
He was later found accumulating shares in the company in the name of other investors, including Mauritius-based foreign institutional investors Orange Mauritius Investments (4.9 per cent) and Hypnos Fund (4.79 per cent), Amin alleged. Also, Mumbai-based PAT Financial Consultants and Finquest Financial Solutions, where Patel is chief mentor, are reported to hold about 12 per cent in Jyoti.
After the issue of fresh equity to Bharat Patel and another investor Nirma Chemical Works Pvt Ltd (7.01 per cent), the promoters’ holding reduced to 32.4 per cent.
The investors led by Patel had alleged that the promoters and the directors of the company are working against the interests of the company and its shareholders.
“They (Patel and group) are complaining of the company not performing well. But that is just an excuse for a hostile takeover,” said Amin.
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