Jindal Poly Films faces lawsuit from shareholders, shares tumble up to 3%
Upstox
2 min read • Updated: April 9, 2024, 5:42 PM
Summary
Minority shareholders sued Jindal Poly Films for syphoning funds and accused promoters of acting against the interest of public shareholders.
Jindal Poly Films faces a class action lawsuit after minority shareholders of the company filed a complaint against the polyester manufacturer in the National Company Law Tribunal (NCLT). The complaint alleges that the company siphoned off funds to promoters, resulting in a loss of about ₹2,000 crore to the company.
According to a CNBC-TV18 report, the NCLT complaint filed on Tuesday, April 9, claims that the alleged operation was conducted between financial years 2013 to 2017. Jindal Poly Films purportedly invested a sum of ₹700 crore into two associated entities through Optionally Convertible Preference Shares (OCPS) and Redeemable Preference Shares (RPS). The company then wrote off the said investment, prompting scrutiny from investors. These entities, namely Jindal India Powertech and Jindal India Thermal Power, defaulted in their debts initiating settlement discussions with lenders.
The complaint also alleged that Jindal Poly Films also invested ₹1,300 crore in multiple tranches in these entities and then sold its stake in the related companies to a promoter group trust for just ₹106 crore.
In response, the company said that the “petition pending before the NCLT has no material impact on the operations/performance of the Company,” in a regulatory filing with the NSE.
Shares of Jindal Poly Films fell as much as 3% during the day. However, they later recovered to close 0.8% lower at ₹544.50 on the NSE.
In its Q3FY24 results, the company’s total income rose 25% to ₹277.1 crore as compared to ₹213.4 crore posted a year earlier. During the same quarter, it recorded a net profit of ₹87.46 crore.