Proxy advisory firm IiAS asks independent board members of Raymond to protect company from promoters by asking them to step away

Proxy advisory firm IiAS asks independent board members of Raymond to protect company from promoters by asking them to step away
  • IiAS in its open letter questions the silence of five independent board members even though another board member – Nawaz Modi Singhania – has alleged assault by the CEO and accused him of financial misconduct.
  • Institutional advisory firm seeks independent investigation by the board and urges them to protect the interests of minority shareholders.
  • Proxy advisory firm asks independent directors to send promoters on leave till investigation is complete.
Gautam Singhania, the flamboyant chairman and managing director of Raymond, is in news for the wrong reasons yet again. But this time the company’s stock has taken a beating after his wife went public with their spat. The company’s shares are down 15% in November after a video of his wife Nawaz Modi Singhania went viral where she is seen sitting outside the gates of JK House because she was not allowed inside.

While Singhania wrote to the board that it was business as usual, investors are not so convinced. In his letter to the board, he has said he is fully committed to the smooth functioning of the company and that he remained the Chairman and MD.

Shortly after his letter became public, proxy advisory firm Institutional Investor Advisory Services, has written an open letter to the five independent members on Raymond’s board. These four members are Mukeeta Jhaveri, Ashish Kapadia, Dinesh Lal, K Narsimha Murthy and Shiv Surinder Kumar.

The letter recounts the sordid tale of the alleged assault on another board member – Nawaz Modi Singhania – who has alleged that she and her daughter were physically assaulted by Gautam Singhania at JK House (company property) in September 2023. His wife and a board member has also also alleged that company funds were being used for Gautam Singhania’s personal benefit (CEO excesses) – and that she was acting as a whistle-blower of sorts.

IiAS in its open letter says that “despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don’t want stakeholders thinking that these accusations are to be tolerated.”


The proxy advisory firm has said in its letter that at the very least, independent directors need to communicate with investors and other stakeholders – assuage their concerns and articulate a course of action that they have taken following these public allegations. “Your actions must protect the company from what proposes to be a long-drawn acrimonious battle between Nawaz Modi and Gautam Singhania. To protect yourselves and delineate yourselves from the allegations, you may wish to retain independent legal counsel.” the letter further says.

In the interest of the company and to safeguard interests of a larger set of stakeholders, IiAS urged the independent directors to undertake an independent investigation into the allegations of both – assault and CEO excesses.

For the duration of this investigation, they have been asked to consider asking both, Nawaz Modi and Gautam Singhania, to take time off from their responsibilities as board members. IiAS said that it recognizes that asking promoters to step aside would not be easy – but as independent directors they have a fiduciary responsibility towards minority investors, employees and larger set of the company’s stakeholders. “Therefore, you will need to dispassionately separate ownership from management,” the letter says.

From the company’s FY23 annual report, IiAS notes that the company has an experienced leadership team with extensive industry experience. The company has also initiated a succession planning process for key roles. Given the leadership depth, IiAS said that they were sure the independent directors would be able to find an interim CEO from within the ranks, who can take over from Gautam Singhania for the duration of the investigation.

While the investigation will provide the facts, as independent directors the advisory firm has asked the directors four key questions:
  • 1. Has either director violated the company’s code of conduct and ethics policy including (but not limited to) moral turpitude?
  • 2. Is there a possibility of criminal liabilities on the company or any of its directors?
  • 3. Are the actions of either director in consonance with the company’s brand? Alternatively, can their actions be disassociated from the brand?
  • 4. If there is merit in the allegations of CEO excesses, what controls will you put in place to arrest any further slippages? Will the impending divorce and these allegations remain a distraction for the Chairman and Managing Director? If so, then having an interim CEO will support unhindered operations of the company, at least until the divorce settlement is done and that there are no further distractions to discharging the role.

Based on the answers to these questions, IiAs has requested the independent directors to take the necessary steps that are in the long-term interest of the company and its stakeholders. If need be, the advisory firm has said that it expects the independent board members to protect the company from its own promoters.