Mumbai: Mystery surrounds the way a prominent shareholder group at embattled S Kumars Nationwide Ltd (SKNL) abandoned its move to throw out chairman Nitin S. Kasliwal at an extraordinary general meeting (EGM) called primarily for this purpose.

At the EGM held in Mumbai, a clutch of retail investors withdrew its resolutions citing no reasons.

A group of investors, led by Bharat Jayantilal Patel, who holds a 21% stake in the debt-laden textile maker that owns the Reid and Taylor suits brand, had demanded the ouster of four existing directors, including Kasliwal, and proposed four new directors to the board.

A leading equity investor, Patel is also chairman at Rubfila International Ltd.

He was in the news most recently for a hostile bid to take over electrical and hydraulic engineering equipment company Jyoti Ltd.​

In its filing to the National Stock Exchange on Thursday, SKNL said the resolutions to oust existing directors were “withdrawn by the requisitionist cum member", while the appointment of four directors was passed by requisite majority.

The Kasliwal family holds just 3.59% in the company.

Patel said over the phone that he was not sure if a management change will help. “It could even worsen the situation. At present, it will take at least a year-and-a-half to bring back normalcy to the company," Patel added. He said he had changed his mind after the management agreed to work in a “conducive manner" with minority shareholders.

“What is required is the prosperity of the company. There are no ego problems," Patel said.

He did not, however, reveal his deliberations with the management. Meanwhile, proxy advisory firm Institutional Investor Advisory Services (IiAS) in a note said it is time SKNL’s lenders took control and regulators stepped in to protect retail investors.

On 28 January, Patel had demanded an EGM for the removal of Kasliwal, Haresh Milyomal Israni, Mithileshkumar Murlidhar Choubey and Sunil Kumar Jain as directors.

Patel had proposed Yogesh Himatlal Patel as director in place of Kasliwal and three others—Pradeep Kariyattu Bhaskaran Kumar, Vanraj Vinod and Uday Kamat—as new directors.

However, at Monday’s EGM held at Santokba Sanskar Sadan near Vile Parle, a western suburb of Mumbai, retail investors withdrew the resolutions for ousting the current management without citing any reasons.

A total of 67 shareholders were present in the meeting, including four representing promoters and promoter group.

The company said the “modified" resolutions were passed by requisite majority to appoint new directors, while it said one of its directors, Mithileshkumar Murlidhar Choubey, had already resigned from the board on 17 April.

Last week, SKNL said it planned to raise funds to repay its debt without detailing plans.

The company owes 4,500 crore to 13 banks, including State Bank of India and ICICI Bank, and has defaulted on paying loan interest and statutory dues.

Kasliwal had aggressive plans, but failed to execute them, said a consultant, requesting anonymity. The debt is huge and there is no direction for revival, he added.

Sovereign wealth fund Government of Singapore Investment Corp. (GIC) had invested 900 crore in SKNL’s Reid and Taylor division in 2008 for a 25% stake. However, the company couldn’t go ahead with a planned public listing of Reid and Taylor.

SKNL has become a leaderless company and the lenders have withdrawn their board nominees and institutional shareholders have exited the stock, leaving retail shareholders to hold the baby, IiAS said.

“From the date it was called, SKNL’s EGM had the makings of a soap opera," IiAS said in a note on Wednesday. IiAS attended the meeting.

The meeting commenced with the announcement that the resolutions which called for the removal of directors were withdrawn.

“This raised questions about the authenticity of the allegations raised by the group that requisitioned the meeting. In a weak attempt to substantiate their action, the group calling the EGM stated that the clarifications provided by the management were sufficient to support the withdrawal. These clarifications, however, were not shared with genuinely aggrieved shareholders who took the trouble to attend the meeting," IiAS said.

IiAS noted that the management then affected magnanimity and inducted four new directors nominated by the very group that had called for its ouster.

“Following a shareholders’ outcry, the chairperson hastily provided sketchy information regarding the new directors," IiAS recollected.

An angry shareholder, who attended the EGM, said the meeting threw up more questions than answers.

“What led to the change of mind by the retail investors? Who benefited in this change? Who is the investor coming to save SKNL? The promoters were furious when shareholders raised these questions," said the shareholder, who did not want to be identified.

Referring to the Jyoti Ltd takeover attempt, the shareholder alleged that Patel “walks into financially vulnerable companies and attempts a hostile take- over", a charge rejected by Patel.

“I am an investor and my job is investing. I don’t know how to run a company. I will decide what is good for my investment," Patel said.

SKNL had extended its accounting period to an 18-month period from 1 April 2013 to 30 September 2014.

The company has failed to publish audited results for the 18-month period, provide the annual report or hold its annual general meeting (AGM), which is required to be held within six months from the financial year end. After considerable delay, an AGM was held on 28 April 2014, for the financial year ended 31 March 2013, and the same was also adjourned without transacting any business.

Even after 11 months, there was no intimation from the company as to when the adjourned meeting will be held.

In a note inviting shareholders for the EGM, the shareholders group had alleged the promoters and promoter group companies had pledged shares to various financial institutions and non-banking financial companies.

“In order to ensure that the shares so pledged can be sold by the pledgees, by announcing the declaration of the dividend, the general public and investors were made to believe that the financial position of the company is strong," the investor group had said in January referring to SKNL’s dividend announcement.

“The company and its board have not complied and has been violating number of statutory provisions under the Companies Act and the Listing Agreement. ... The present management of the company is grossly mismanaging the company and members also need to give a thought as to why promoter should be bothered about the company or its stakeholders, when his holding is so minuscule," investors had said.

During the EGM, there was also an attempt to bring the Kasliwal family feud on the agenda, IiAS said.

“A member of the divided Kasliwal family got up to accuse the existing management of wrongdoings. Yet, like most of the irate voices that raised concerns about the ‘sham of an EGM’, his tirade was cut short with the meeting being adjourned.

The meeting was conducted in the traditional show of hands fashion with no e-voting option provided despite it being mandatory for listed companies to do so. But, this isn’t the first time that SKNL has violated regulatory requirements, IiAS said.

Kasliwal did not offer any comments for the story. “We have circulated the information about the proceedings of the EGM. I can give more information after two weeks," he said on Thursday.

When asked about a potential investor coming on board, Patel said the company was three years away from the last audited accounts and inviting an investor without getting financials in shape is like shooting in the dark.