Proxy Firms Divided Over Amit Kalyani's Board Reappointment In Aunt's Firm

An ownership dispute between two of Hikal Ltd.'s co-promoter families, the Kalyanis and the Hiremaths, has escalated into a boardroom battle with the pending reappointment of Amit Kalyani, son of Bharat Forge Ltd.'s chairman Baba Kalyani, as a non-executive director.

The vote, taking place at the company's annual general meeting on Tuesday, has divided two major proxy advisory firms, with the outcome now hinging on the votes of non-promoter shareholders.

The conflict stems from an ongoing legal dispute related to a 1994 family arrangement regarding the ownership of Hikal. The Kalyani family holds a roughly 34% stake in the company, while the Hiremath family, led by Baba Kalyani's sister Sugandha Hiremath, holds approximately 35%. The remaining 31% of the shares are held by institutional and retail investors, whose collective vote is expected to be decisive.

Stakeholder Empowerment Services has recommended shareholders vote in favour of Amit Kalyani's reappointment. To add some context, Amit has been serving on Hikal's board for 13 years.

The firm acknowledged his six listed directorships but noted that as they are all within the same promoter group, it did not raise major concerns regarding his time commitments. The report also highlighted that the family dispute is between two specific groups and does not necessarily impact the professional functioning of the company.

In contrast, Institutional Investor Advisory Services has advised shareholders to vote against the resolution. IiAS stated that the ongoing ownership dispute could "impact the overall functioning and decision-making of the company" and advised that the promoters should resolve their conflict before seeking board positions. IiAS also pointed out that its recommendation was made to "shield the larger shareholder interest from a prolonged promoter dispute."

KIL, the holding company through which the Kalyanis claim over 31% of their stake, in their response to IiAS said, "Amit Kalyani has been a non-executive director of Hikal since 2012 and has no role to play in the day-to-day affairs of Hikal."

Further, KIL added Amit is not on any of the committees of Hikal. "Amit Kalyani’s appointment was recommended by the nomination and remuneration committee and board of directors of Hikal."

This is not the first time the family feud has impacted boardroom decisions at Hikal. Baba Kalyani himself failed to secure sufficient shareholder support for his reappointment in December 2023, ending a 31-year tenure on the board. The vote on Amit Kalyani's directorship is set to conclude on Monday, with results expected to be announced on Tuesday.