Tuesday, August 2, 2011

Mahindra Composites Ltd - AGM (Follow-up)

Thanks a lot for the response to my earlier post. The large number of emails I got tells me that investor awareness is not dead yet! My friend Ayush tweeted the post and brought it to the attention of Mr.Anand Mahindra. (Thanks dude, I didnt need to write to the Mahindra Group management because of you.)

Now, I sincerely believe in being objective and disclosing both sides of the coin, hence this post...

Today morning, I got a call from Mr.Satoor, the CEO of Mahindra Composites, expressing regret for any misunderstanding that may have occurred at the AGM. He reaffirmed the Company's and the Group's commitment towards shareholders, regardless of the number of shares held. He also invited me to discuss any unanswered questions I had over a cup of tea and said that the management is always willing to answer all shareholder queries promptly. Free tea is always good, so, thank you for the invitation Sir! :-)

I personally thought that it won't be right to write just about my part of the story or to mention only negative aspects. Its fair to go on record and also mention about what the management did about the AGM fiasco and the prompt and professional way in which the CEO handled the matter..

Cheers and happy investing!!

Monday, August 1, 2011

Mahindra Composites Ltd - AGM

Hello again! In the last post, I had wished you all a happy AGM season! Me and my colleague attend lotsa AGMs.. Lets just discuss a bit about what happened recently at an AGM I attended. A fair warning; this post does not contain any buy/sell advise or does not offer any opportunity for the reader to earn money. For what its worth, it will be useless for a majority of readers! :-D

Ok..just a bit of basics first..

  • A company is owned by its equity shareholders, who appoint a group of people to manage the company on their behalf (Board of Directors)
  • Once a year, these managers meet the owners to discuss what all they did and what all they intend to do going forward (AGM)
  • Usually, the Board of Directors and the management of the company treat the shareholders with professional courtesy and at least a bit of respect.
Now lemme just tell you people what happened at the recently held AGM of a company called Mahindra Composites Ltd, which is part of the Mahindra Group.

A couple of days before the AGM, a Mumbai based analyst friend of mine called up the CS of the company. The problem was that he had bought the shares a bit late, so he was not a shareholder of the company as on the applicable record date. My friend enquired whether he would still be allowed to attend the AGM. Now usually, companies do allow such analyst-shareholders to attend the AGM (although, legally, they can surely disallow). In some cases, the company people politely refuse, saying that as per law, such request cannot be entertained. However, the reply of the CS of Mahindra Composites to my friend was "kya re, mere baap ka company hai kya? I said no..Dont ask again!!" Thats one hell of a rowdy CS, we thought!  :-D

So my friend (very wisely) decided not to come all the way to Pune, from Mumbai to attend the AGM. I, on the other hand (not very wisely), went ahead for the AGM. And it turned out to be one of the most pathetic AGMs I ever attended. Here is what happened...

  • Myself and one more person who came late, were the only non-employee shareholders at the AGM. All other shareholders present were employees, wearing the company's uniform.
  • Mr.K (lets call him so), the CFO, came across as an extremely rude and arrogant person, who does not display a ounce of professionalism, taking shareholders fully for granted. Upon seeing my questions which i provided in printout form, his response was "these questions have nothing to do with the AGM of the company, hence they will not be answered". (Although the questions were related to the company's performance and its plans in the near future.. Discussing all this is actually what the AGMs are held for!!) During the AGM too, i asked one question, but was asked to sit down by the CFO and was not allowed to ask questions to the CEO. After being polite for a while, i had to raise my voice (something which I never ever do anywhere!). After about 5 mins of heated arguments, he said that most of the questions are forward looking, and will not be answered by them since 'SEBI does not permit them'. :-) Creating a bigger scene and disrupting the AGM would have been easy, but I thought there is no sense in letting ego come in between..And that wouldnt have been very professional on my part too..
  • Mr.K then asked me how many shares i own? (My shareholding in Mahindra Composites is only 1 share, bought for Annual Report purposes). Upon learning that, Mr.K suggested that i should not bother asking questions, since i hold only one share. So, i asked him if the management of the company treats small and large shareholders differently. To which, he replied yes!!! The entire staff left immediately after the resolutions (which got over in 15 mins), leaving no chance for asking questions.
  • Even post the AGM, the CFO was extremely rude and essentially was asking me to get lost (though not directly, of course!)
So what do we gather from this?
  1. A good Group pedigree does not automatically mean good management. 
  2. As minority shareholders, we have to humbly learn and admit that we are nothing! And sometimes, people like Mr.K will remind us that!! Well, a dose of humility never goes waste! ;-) 
  3. Things like these affect investing decision making (I would not buy the shares of such a company where the management thinks that ye to apne ghar ka company hai. Shareholders and all are just a formality!) I just cannot think of partnering with such people, by buying shares of Mahindra Composites. 
  4. However, such factors cannot be brought in an excel sheet. So we should all remember that there is life beyond the excel sheet and a huge number of investment decision making factors lie outside the purview of the excel sheet.
So cheers and happy investing!!