To end the deadlock between Reckitt Benckiser and the TTK Group, the Chennai Bench of the Company Law Board has decided to appoint an independent entity to value the shares of TTK-LIG.

Reckitt Benckiser through its global acquisition of SSL is a partner of TTK-LIG, which manufactures ‘Durex' and ‘Kohinoor' brand condoms.

In May, Reckitt moved the Company Law Board against TTK, complaining that it did not have equal representation on the TTK-LIG board and that the Chennai company was not supplying condoms to the British parent.

Ms Lizamma Augustine, Member of the CLB, Chennai Bench, in an order, said: “In my view, the TTK group stopped supply to the foreign partner not for the interest of the company but to put pressure on the foreign partner to agree to their terms for exit from the company. The petitioner also has an idea to shift its outsourcing to its own 100 per cent-owned outlets in China or Thailand within a short period. This fact can be one of the reasons for the petitioner's refusal to enter into long term supply agreement with the company.”

The order further states that the TTK group has “admittedly agreed to exit from the company. The disagreement is on the price. TTK is expecting an offer which they cannot refuse. It appears that the TTK group is not interested in buying out the RB group but they made an offer to buy out the petitioners share for Pound 18 million. Thus the parties would agree that a valuer needs to be appointed to value the shares of the company.” The TTK group had, in the alternative, offered to sell its shares for £ 205 million.

The order states that apart from the claim of equal representation on the board, affirmative voting right of the petitioner, etc., the actual area of dispute can be narrowed down to a difference of opinion on the quantity, the tenure and pricing of the distribution agreement. When the respondent insists on a long-term (five years) commitment to the supply of materials (condoms), the petitioner (RB) is not ready to go beyond three months.

The order further states, “ln the facts and circumstance of the case the only course open to this Bench is to permit the TTK group to exit from the company on a fair value to be arrived at by valuation of shares. Hence, I am inclined to appoint a valuer to value the shares of the company. The TTK group can also opt to purchase the petitioner shares.” The order directs both parties to suggest the auditors' names and file their terms of reference.

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