An open letter to Raymond Limited’s Independent Directors

28 November 2023

• Ms. Mukeeta Jhaveri
• Mr. Ashish Kapadia
• Mr. Dinesh Lal
• Mr. K Narsimha Murthy
• Mr. Shiv Surinder Kumar

In media reports published last week, Ms. Nawaz Modi Singhania (Nawaz Modi), a board member, alleged that she and her daughter were physically assaulted by Gautam Singhania, the company’s Chairman and Managing Director, at JK House (company property) in September 2023. She also alleges that company funds were being used for Gautam Singhania’s personal benefit (CEO excesses) – and that she was acting as a whistle-blower of sorts.

Despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don’t want stakeholders thinking that these accusations are to be tolerated.

At the very least, as Independent Directors, you need to communicate with investors and other stakeholders – assuage their concerns and articulate a course of action that you have taken following these public allegations. Your actions must protect the company from what proposes to be a long-drawn acrimonious battle between the Nawaz Modi and Gautam Singhania.

To protect yourselves and delineate yourselves from the allegations, you may wish to retain independent legal counsel.

In the interest of the company and safeguard the interests of a larger set of stakeholders, we urge you to undertake an independent investigation into the allegations of both, assault and CEO excesses.

Your legal counsel and the firm undertaking the independent investigation must neither currently be nor have previously been associated with the Raymond group of companies or connected with the Singhania family.

For the duration of this investigation, you must consider asking both, Nawaz Modi and Gautam Singhania, to take time off from their responsibilities as board members. We recognize that asking the promoters to step aside is not easy – but as independent directors you have a fiduciary responsibility towards minority investors, employees and larger set of the company’s stakeholders. Therefore, you will need to dispassionately separate ownership from management.

From the company’s FY23 annual report, we note that the company has an experienced leadership team with extensive industry experience. We also note that the company has initiated a succession planning process for key roles. Given the leadership depth, we are sure you will be able to find an interim CEO from within the ranks, who can take over from Gautam Singhania for the duration of the investigation.

While the investigation will provide the facts, as independent directors we urge you to answer the following questions:

1. Has either director violated the company’s code of conduct and ethics policy, including (but not limited to) moral turpitude?
2. Is there a possibility of criminal liabilities on the company or any of its directors?
3. Are the actions of either director in consonance with the company’s brand? Alternatively, can their actions be disassociated from the brand?
4. If there is merit in the allegations of CEO excesses, what controls will you put in place to arrest any further slippages?
5. Will the impending divorce and these allegations remain a distraction for the Chairman and Managing Director? If so, then having an interim CEO will support unhindered operations of the company, at least until the divorce settlement is done and that there are no further distractions to discharging the role.

Based on the answers to these questions, we request you to take the necessary steps that are in the long-term interest of the company and its stakeholders. If need be, we expect you to protect the company from its own promoters.

We believe that any settlement between the two promoters cannot mean that such behaviour, unless the investigation shows otherwise, be condoned.

Your resolute actions in the current situation will be etched in corporate history; these will provide guidance to future boards on handling promoters in trying situations. While we wish for such circumstances never to repeat, we also wish for boards to have the fortitude to handle them objectively.

Click here to read the letter