Gautam Singhania-Nawaz Modi feud: Shareholders jittery, proxy advisories fear further impact on Raymond stock

Gautam Singhania-Nawaz Modi feud: Shareholders jittery, proxy advisories fear further impact on Raymond stock

As the Gautam Singhania-Nawaz Modi Singhania dispute rages on, the Raymond Ltd stock continues to take a hit with proxy advisory firms — entities which advise shareholders on corporate action from time to time — keeping a close watch on the unfolding developments within the Raymond promoter family.

Last week, even as the bitter feud between Gautam Singhania, the Chairman and MD of Raymond, and his wife Nawaz, who is also a non-executive director on Raymond’s board, broke out with the latter going public and alleging physical assault, the company’s stock fell nearly 8 per cent to Rs 1,649.10 for the week ended November 24, against Rs 1,783.80 on November 17.

“If there is no amicable settlement in sight, and the battle heads to the courts, there will be an impact on the business,” J.N.Gupta, a former Securities & Exchange Board of India (Sebi) executive director who runs proxy advisory firm Stakeholder Empowerment Services, told Business Today.

Shriram Subramanian, who runs proxy advisory firm InGovern, is also keeping a watch on the goings-on at Raymond. “These developments will obviously impact minority shareholders. I don’t see them having to rush to buy the stock at this point,” he told BT.

Earlier, Gautam Singhania’s father and patriarch of the Singhania family, Vijaypat Singhania, who also had serious disagreements with his son, told Business Today in a detailed interview that Raymond’s brand would ultimately depend on how shareholders and bankers look at it. Singhania Sr. also said he would support Gautam’s wife Nawaz, not his son, in this dispute. He also added that Raymond had a large number of mature, adult shareholders who would take informed decisions.

One of the critical issues which shareholders and market watchers are keenly looking at is how much of the family’s wealth Nawaz Modi Singhania eventually demands in the wake of the separation. While Vijaypat Singhania had in the interview mentioned that Nawaz needed to check how much she could get under the Hindu Marriage Act, reports have now suggested that the marriage was solemnised under the Special Marriage Act since Nawaz is a Parsi. Nawaz Modi Singhania has also reportedly sought 75 per cent of the wealth for herself and her two daughters, something which Vijaypat Singhania believes his son will never agree to.

“All these aspects will affect shareholder confidence and will be keenly watched. If you consider carefully that the daughters will eventually become a separate set, then there are three wings of the promoter family—Gautam, Nawaz and the daughters. All this has implications for the future,” says a senior market analyst who declined to be named.

Subramanian of InGovern said shareholders and market watchers will be keenly watching how the wealth of the promoter family is eventually divided. He, however, did not rule out the battle heading to the courts. “If she demands 75 per cent, that’s a big number. There will be implications on the company,” he said, adding that at this point InGovern would not be issuing any advisory since there is no corporate event which has taken place. However, he added that institutional investors would also be keeping a close watch on the developments.

Gupta, on the other hand, added that while the market capitalisation of the Raymond stock has taken a hit after the husband-wife battle broke out, the earlier surge in the Raymond stock was also because the hidden value of the company’s large land parcel at Thane, Maharashtra, is now being unlocked.

According to the Raymond annual report for 2023, the company has about 120 acres of land parcel at a prime location in Thane and about 24 acres are currently being developed. The real estate segment of the company saw Rs 1,115 crore in sales at an Ebitda margin of 25.7 per cent.

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