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Raymond minority shareholder alleges misuse of funds

LiveMint logoLiveMint 02-03-2017 Soumya Gupta

Mumbai: A minority shareholder of apparel maker Raymond Ltd has alleged that company funds were utilised for chairman and managing director Gautam Singhania’s personal use.

The letter, published as an advertisement in business daily Business Standard, was addressed to Singhania along with chairman emeritus Vijaypat Singhania, Raymond’s board of directors and auditors of the company.

The shareholder, Vishal Patel, claimed that Raymond used Rs186 crore to develop a property on Mumbai’s Bhulabhai Desai Road, which he said is the family home of the promoters of the company.

Patel alleged that of the Rs183.44 crore the company paid in interest in FY2015-16, around Rs19.74 crore can “be reasonably attributed to these expenses”.

“The minority shareholders were and are kept in complete dark about commercial aspect of the said project which defeats the basic corporate governance norms required to be followed by the company,” Patel said in the letter.

He also alleged that the company owned “luxury yachts and many speed boats and water equipments” worth Rs71.78 crore, and that the company had accounted for Rs113.18 crore in depreciation, at a simple interest of 12% per annum, in the last 9 years on these yachts.

Mint could not independently verify the claims made in the letter.

Last fiscal year, Raymond posted revenue of Rs2,810.81 crore, with profit after tax of Rs82.09 crore. However, in the same year, the company recorded depreciation of Rs87.47 crore.

Patel rounded off his letter by saying that by investing company funds in “unproductive avenues” for personal use of the promoters, the management had turned Raymond into “The Complete Disaster”, echoing the company’s classic tagline “Raymond – The Complete Man.”

“Our company in the recent past has already responded suitably to similar frivolous and unsubstantiated allegations made by the same group of shareholders,” a Raymond spokesperson said in an emailed statement.

“These allegations are highly motivated with vested interests. We wish to state that our company, its promoters and directors have and always will act in compliance with the law and in the interest of all stakeholders of the company,” the spokesperson added.

Shares of Raymond Limited fell 4.98% Thursday, closing at Rs607.55, on a day when the benchmark BSE Sensex closed 0.5% lower at 28,839.79 points.

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