The Hindu Business Line : TMB board election sparks factionalism, infighting

THERE is hectic activity among the shareholders of Tamilnad Mercantile Bank as those seeking election to the board of directors scurry to corner votes in their favour.

Talking to a cross-section of members of the community, a striking point is the heartburn and dissatisfaction among those who had set out to ensure that the Nadar community, which originally floated the bank in 1921, retains control of the bank for the common good of the community as originally intended by its founders. They are worried that, as things stand, a faction among the community may get control of the bank.

The decision to elect members to the board has sparked factionalism and infighting in a bank which is facing a protracted controversy over its ownership. Whatever the outcome on the ownership, the quality of the board will decide the fate of the bank, say sources who have been closely involved in the issue.

More than 50 persons are vying for the 10 vacancies on the board. Assuming that the 10 directors have controlling stake, each would have at least five per cent vote in his favour, if not actually owning the shares.

Sources in the know say that though the shares are not listed on the exchanges, the last few days have seen hectic activity either in the form of contenders cornering proxies or shares being sold.

Shareholders are willing to sell off the shares, which fetch around Rs 4,000 each. These were purchased for about Rs 8,200 in 2001, a portion of the 34 per cent stake — - about 96,000 shares — that the Nadar community was able to buyback from Mr C. Sivasankaran of the Sterling Group. These shares have been distributed to about 25,000 shareholders since then.

At that time Mr Sivasankaran held 67 per cent of the bank's equity. Recently in February, Mr Ramachandra Adityan entered into an agreement with Mr Sivasankaran's representatives to purchase the balance 33 per cent, but the Nadar Mahajana Sangam has taken the issue to court. Sources point out that under the agreement, each share works out to more than Rs 13,000. Mr Adityan could not be reached for his comment.

With 33 per cent of the shares caught up in legal wrangle, the shareholders are jockeying for position to garner as much support from the balance 67 per cent. Of this, about 34 per cent has been distributed to over 25,000 shareholders.

About 15 per cent is available with a few individuals who have one per cent to four per cent stake each. Another 10 per cent to 12 per cent is probably unavailable due to various individual reasons, according to the sources.