Family dispute ends Baba Kalyani’s 31-year tenure on the Hikal Board

The ownership conflict in Hikal Limited involving Bharat Forge Limited’s Chairman and Managing Director, Baba Kalyani, and his sister, Sugandha Hiremath, has entered a new phase. His 31-year tenure as a Board member at the chemical company concludes with a decisive shareholder vote.

Kalyani has been unable to retain his Board position as he failed to get the required votes to continue serving as Hikal’s non-executive, non-independent Director. This requirement was imposed due to his age.

As of January 7, Baba Kalyani had reached the age of 75. To maintain his role as a Director, he needed backing from 75% of Hikal’s shareholders. However, he only secured approximately 52% of the votes. Regulatory filings revealed that about 48% of Hikal shareholders who participated have voted against his reappointment.

The anticipation of his removal was justified, considering Sugandha’s substantial stake in Hikal, amounting to approximately 35% as of the end of September. As reported by TOI on December 23, she cast her vote against her brother’s ongoing role as a Director. As a result, the resolution for his reappointment was defeated, requiring the support of 75% of the total votes. The combined postal ballot and electronic voting process, spanning a month, concluded on December 24. In total, around 79% of Hikal shares were part of the voting process.

Approximately 27% of institutional shareholders who participated in the vote opposed the resolution for reappointment, as per the filing. Among voting shareholders who were neither promoters nor institutional holders, around 43% preferred to remove Baba Kalyani. Hikal finds itself embroiled in a legal dispute between the siblings, with Sugandha insisting that Baba transfer his 34% stake in the chemical company to her, as outlined in a family agreement of 1994. Kalyani, however, rejects the existence of such a share-transfer provision.

Incidentally, earlier this year, Kalyani encountered challenges in maintaining his Board position at Bharat Forge. A significant portion of institutional investors (approximately 54%) voted against his reappointment as the managing Director of the industrial component maker. Nevertheless, owing to his substantial ownership of over 45% of the flagship company of his group, he succeeded in retaining his Board seat.