Orissa Sponge promoter pulled up over March 4

PK Mohanty-promoted Orissa Sponge Iron and Steel (OSIL) has landed in a corporate governance mess with one of the board directors saying that no decision was taken in the “emergency board meeting” held on March 4.

A letter by AKK Meena, a director at OSIL and the managing director of IPICOL, which has a 5% stake in the company, to PK Mohanty, executive vice chairman and managing director, OSIL, asked to withdraw a filing sent to the Bombay Stock Exchange (BSE). A copy of the letter is with DNA.

The BSE filing said that the company has passed a resolution to convert 30 lakh promoter group warrants into equity shares of the same number.

“The board of directors of the company (OSIL), at its meeting held on March 4, 2009, had passed the resolution to convert the 30,00,000 warrants allotted to promoter group i.e. TRFI Investment Pvt Ltd on December 20, 2007 into the same numbers of equity shares to TRFI Investment Pvt Ltd,” the filing said.

Meena asked Mohanty to withdraw the filing and give the board a formal notice for the meeting. He wrote, “….any information given to the stock exchange about the decision of the board meeting may immediately be withdrawn.”

Calls and SMS messages to Mohanty went unanswered. Sources said that a case against the company has been filed with the Companies Law Board (CLB) over corporate governance issues. Another OSIL director, V Raghuraman, a nominee of Indian Renewable Energy Development Agency (IREDA), told DNA, “I wasn’t informed about the meeting and that’s why I have resigned from the board.”

Raghuraman said the promoter told him the company tried to get in touch with him but couldn’t.

In the letter, Meena wrote, “We would like to inform you that you personally came to the office of IPICOL at 4.30 pm on March 4 to hold an emergency board meeting to allot shares by conversion of 30 lakh equity share warrants to equal number of equity shares in favour of TRFI Investments Pvt Ltd, although no formal notice in writing for such meeting was communicated to us before the meeting.”

He asked Mohanty to furnish some documents to consider the proposal. Meena had asked for the status of the warrants issued to TRFI. He also wanted a legal opinion on the conversion of these warrants keeping in mind their status and the public offer and counter offers made for OSIL shares. He also asked for certificates from statutory auditors and bankers regarding receipt of balance amount due against the share warrants for their conversion into shares.

“Since the documents and legal opinion (about the warrants with Mohanty) have not been produced, no decision has been taken in the board meeting as proposed by you. You are requested to convene a formal board meeting by serving due notice to the directors along with detailed agenda for consideration of the proposal submitted by you.”

Sources said that Mohanty couldn’t convert these warrants earlier as he didn’t have the funds required. He subsequently raised funds after selling stake to Monnet Ispat.

However, the warrants are not in Mohanty’s possession anymore as he pledged them to Delhi-based NBFC Pisces Portfolios, which sold them to another Delhi firm, Moon Star Securities. Mohanty is now locked in a legal battle with Moon Star in the Kolkata High Court over the rights to the warrants.