Shares of private lender Dhanlaxmi Bank recovered today after falling 10% in intraday trade compared to the close of the previous session following the resignation of its independent director Sridhar Kalyanasundaram on Sunday. The shares, which opened a gap at ₹27.61, rose to a 52-week high of ₹33.83 and closed up 4.5% at ₹30.59 on the BSE.
The bank, headquartered in Thrissur, Kerala, had appointed Kalyanasundaram as an independent director in December 2022. He resigned from the board on September 16, 2023, accusing the other board members of “lack of banking knowledge” and “factionalism.”
Kalyanasundaram raised concerns over a proposed rights matter, saying it was approved in March 2022 and there were many issues that remained “unresolved”.
“The Bank’s Rights Issue was approved by the Bank’s Board of Directors on March 171, 2022 and has since had to be deferred for over 9 months due to various issues in the Board, including the status of the Board itself “Lack of composition to process the Rights Issue” until the 95th. Annual General Meeting on December 30, 2022 – the delay due to the two written proposals and the resulting “compromise agreements” etc.,” says Kalyanasundaram.
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Nevertheless, he says, the share issuance committee submitted an application to issue the block as of January 6, 2023, and he personally asked 81 questions about the version submitted at that time. “It remains unresolved to date, despite various legal contributions from various quarters and the ‘compromise meetings’ held by the EIC chairman in June/July,” he added.
He accused the board of taking a “bulldozer approach” or openly threatening to “fire him from the board.”
On the capital raise, he said he had told his colleagues that the proposed infusion of ₹130 crore on a rights issue basis was “not enough” if the bank wanted to remain competitive and relevant, but he said board members were intentional about others’ discussions “suppressed”. members, especially him.
“I had pointed out the irregularities in the manner in which the managing director and the company secretary conducted the board and committee meetings at which the agenda and frequency of these meetings were decided, at both meetings of the independent directors. It was dismissed as ‘no, it’s a serious problem’.”
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He also pointed to “probity and lack of consensus” regarding the various “whistleblower” matters brought to directors. “The board has received numerous complaints of both the anonymous and signed variety, but has focused primarily on dismissing them all as “a common practice over time in this bank.”
He says there is no consensus that the CVO should require action on some or all of these issues. “In fact, the appointment of CVO itself proved to be challenging and had to be completed only recently, and that too due to pressure from regulators rather than the oversight of the board itself.”
He accused the members of “unethical behavior” in terms of conducting business. “While the OTS system has been used with great success in the banking sector as a whole to effectively deal with the NPA positions, it has also been used where it had no impact on the NPA position of the bank, by its senior management.”
Dhanlaxmi Bank reported a profit of ₹28.3 crore in the first quarter of FY24 compared to a loss of ₹26.4 crore in the year-ago quarter. Revenue stood at ₹341.4 crore in the June quarter of 2023 as compared to ₹236.8 crore in the year-ago period.
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