Minority Shareholders File Class Action Suit Against Jindal Poly Films Management

In a significant legal move, minority shareholders of Jindal Poly Films have launched a class action suit against the company's management and promoters at the National Company Law Tribunal (NCLT), New Delhi, on March 21. The shareholders, holding a collective 4.99 per cent stake in the specialty films manufacturer, have accused the management of oppression and mismanagement, leading to financial losses. They are seeking compensation for damages allegedly caused by the sale of shares at undervalued prices to a promoter entity and other firms.

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The crux of the petition revolves around the sale of optionally-convertible preference shares (OCPS) and redeemable preference shares (RPS) owned by Jindal Poly Films in a subsidiary. The shareholders argue that these were sold to SSJ Trust and its trustees Shyam Sunder Jindal and Subhadra Jindal, along with Jindal Poly Investment, at values that did not reflect their true worth, thereby harming the company financially. They are urging the NCLT to declare these transactions null and void and reverse them in the company's books.

Furthermore, the petitioners have requested that the tribunal orders the promoters and company officials responsible for these decisions to compensate Jindal Poly Films for a loss amounting to Rs 2,268.03 crore on the sale of OCPS. They have also sought interim relief from the tribunal to maintain a status quo regarding OCPS and RPS until a final decision is made.

The matter was brought before the Delhi-based Principal bench of the NCLT, which has scheduled the next hearing for April 9 after an initial review. The petition also highlights concerns over the write-off of loans provided by Jindal Poly Films to Jindal Thermal, which allegedly led to a devaluation of the company's securities. Additionally, it questions the sale of Jindal Thermal shares owned by Jindal Films to a promoter group entity, suggesting that these actions were not in the best interest of all shareholders.

Jindal Poly Films is an integral part of the USD 2 billion BC Jindal Group, a conglomerate with over six decades of operations spanning various sectors such as Polyester & Polypropylene films, Power generation, Cold Rolled Steel Strips, and Galvanized Sheets. This lawsuit marks a significant challenge within one of India's prominent business groups, highlighting issues related to shareholder rights and corporate governance.