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The tussle between Reckitt Benckiser and TTK Group to control TTK-LIG took yet another turn with Reckitt filing a case in the Madras High Court challenging the Company Law Board's decision to decline to stay the resolutions passed by TTK-LIG.
Reckitt Benckiser through its global acquisition of SSL is a partner of TTK-LIG, maker of ‘Durex' and ‘Kohinoor' brand condoms.
Two months ago Reckitt Benckiser had filed a case in CLB, complaining that it did not have equal representation on the TTK-LIG board and that the Chennai company was not supplying condoms to the UK parent.
Two weeks ago, Ms Lizamma Augustine, Member of the CLB, Chennai Bench, in an order, said, “I am not inclined to stay the resolution passed in the meeting of the board of directors held on May 2, 2011 because there will be a deadlock if the implementation of the resolution is suspended.”
Apart from the claim of equal representation in the board and affirmative voting rights of Reckitt Benckiser (the petitioner), the actual area of dispute can be narrowed down to a difference of opinion on the quantity, the tenure and pricing of the distribution agreement, said the order.
While the TTK Group insists on a long-term (five years) commitment for the supply of materials, Reckitt is not ready to go beyond three months.
The order further states: “In my view, the restoration of status quo prior to May 2, 2011 will not be in the interest of the company since it will not in any away help the resumption of supply by the respondents.”
The order adds that in the facts and circumstances of the case, the only course open to this Bench is to permit the TTK group to exit the company on a fair value to be arrived at by valuation of shares.
Therefore, to end the deadlock between Reckitt Benckiser and the TTK Group, the Bench has decided to appoint an independent entity to value the shares of TTK-LIG.
Reckitt has suggested KPMG and Ernst & Young while TTK Group has suggested Deloitte and an Indian audit firm to value the shares of the company. The CLB is yet to decide on the audit firm.
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