When a VIP Resigns!

Ranganathan V 06 June 2024

Economy & Nation

Discussing a company in the suitcase business appears not ill-timed when a mega election, that would have seen many thousands in operation, just concluded!

VIP Industries Ltd, which has a ubiquitous presence in almost every household in the country, is in the news today for an intriguing reason!

Nisaba Godrej, a scion of the famed Godrej house, submitted her resignation from her position as an independent director in the company.

While the resignation letters submitted by independent directors, typically skirt contentious issues, except in the rarest of cases, Ms Godrej puts the issue squarely in the face for everyone to see.

Nothing is hidden inside a briefcase!

The resignation letter explodes on one’s face as it gives the reason of ‘leadership accountability and succession planning’ as the areas of disagreement between her and the chairman/ board!

To expect the director tendering her resignation to say more and write an essay on what actually transpired in the board discussions or outside of it that led to the decision is seeking too much sensitive detail to be put on record.

However, the shareholding public would certainly wish the company to provide more clarity on the matter as the reference to leadership accountability is something that may bother the investors given the current level of performance which is anything but comforting.

The succession to a leadership position is, typically, a decision taken at the dinner table or in a more private area of the family house between the members of the family controlling the business in all family-owned enterprises.

Irrespective of the constitution of the board of directors, they may feel well treated and duly respected if they are the first ones to be informed of the decision, rather than knowing it from the press scoops or through friends!

The Piramal family, which owns in excess of 51% of the company with clearly the whip in its hands for controlling the decisions on key matters, may be no exception to this.

Dilip Piramal is the chairman, and his daughter Radhika Piramal holds the position of executive vice-chairperson.

It is gathered from some news reports appearing today (nothing officially from the company sources), that Ms Piramal is based in London and has no interest in running the business.

(Ranganathan V is a CA and CS. He has over 43 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as senior advisor post-retirement handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)

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