Raymond stock, family feud, shareholder impact, hidden dynamics

Gautam Singhania-Nawaz Modi Dispute: Shareholders Uneasy, Proxy Advisories Apprehensive of Further Impact on Raymond Stock

As the acrimonious dispute between Gautam Singhania and Nawaz Modi Singhania unfolds, Raymond Ltd‘s stock remains under duress, causing concern among proxy advisory entities—consultative bodies offering counsel to shareholders on periodic corporate decisions. These firms vigilantly monitor the evolving dynamics within the Raymond promoter family.

In the preceding week, as the rift between Gautam Singhania, Chairman and MD of Raymond, and his wife Nawaz, a non-executive director on Raymond’s board, escalated publicly with allegations of physical assault, the company’s stock witnessed a significant dip of nearly 8 percent, closing at Rs 1,649.10 for the week concluding on November 24, down from Rs 1,783.80 on November 17.

J.N. Gupta, a former executive director of the Securities & Exchange Board of India (SEBI) and the founder of proxy advisory firm Stakeholder Empowerment Services, expressed apprehension, stating, “If a harmonious resolution remains elusive and legal avenues are pursued, the repercussions on the business are inevitable.”

Shriram Subramanian, proprietor of InGovern, another proxy advisory firm, is also closely monitoring the unfolding scenario at Raymond. He remarked, “These developments will undoubtedly impact minority shareholders. I do not foresee an immediate rush to invest in the stock at this juncture.”

Earlier, Vijaypat Singhania, the patriarch of the Singhania family and father of Gautam Singhania, who had previously grappled with disputes with his son, conveyed in a detailed interview to Business Today that Raymond’s brand perception would ultimately hinge on the perspectives of shareholders and bankers. Singhania Sr. declared his support for Nawaz in this conflict, emphasizing the presence of mature shareholders capable of making informed decisions.

A focal point of interest for shareholders and market observers is the extent of the wealth claimed by Nawaz Modi Singhania following the separation. While Vijaypat Singhania indicated in the interview that Nawaz needed to assess her entitlement under the Hindu Marriage Act, recent reports suggest that the marriage was solemnized under the Special Marriage Act, given Nawaz’s Parsi background. Allegedly seeking 75 percent of the wealth for herself and her two daughters, Nawaz’s stance is one that Vijaypat Singhania believes his son will vehemently oppose.

These variables, including the potential emergence of a separate entity comprising the daughters, add complexity to the future dynamics within the promoter family, prompting a senior market analyst, who chose to remain anonymous, to remark, “All these aspects will impact shareholder confidence and will be keenly observed.”

Subramanian of InGovern acknowledged the intense scrutiny on how the promoter family’s wealth will be divided. While refraining from issuing an advisory at this juncture, he did not rule out the possibility of legal proceedings, stating, “If she demands 75 percent, that’s a substantial figure with implications for the company.”

Gupta emphasized that the recent fluctuation in Raymond’s stock value is not solely attributed to the family discord but also to the unlocking of the hidden value of the company’s extensive land parcel in Thane, Maharashtra. According to the 2023 annual report, Raymond possesses approximately 120 acres of prime land in Thane, with around 24 acres currently under development. The real estate segment recorded sales of Rs 1,115 crore with an EBITDA margin of 25.7 percent.