| Alagh: The cookie crumbles
Mumbai, June 4: Sunil Alagh, managing director of Britannia Industries, was forced out of the board of the Bangalore-based biscuit major after staying at the helm for more than a decade.
“The board of directors of Britannia Industries Ltd has passed a resolution to terminate the employment of S. K. Alagh as managing director of the company with immediate effect,” the company said in a terse notice to the stock exchanges.
In Bangalore, officials from the Britannia headquarters were tightlipped except to say that the top brass were in Mumbai and would return only tomorrow. “The action has shifted to Neville House, the headquarters of Bombay Dyeing,” corporate circles say.
There has been speculation about the serious differences between Alagh and Bombay Dyeing boss Nusli Wadia over the running of the biscuit major. Wadia is chairman of the Britannia board.
The Wadias and French biscuit major Group Danone have an equal stake in Britannia, which is around 47 per cent with equal voting rights.
Corporate mavens were surprised over the way Alagh was forced out of the company that he and Wadia had turned into one of the largest food processing operations in the country. “This was never expected. It shows the differences were deep and relations fractious,” they said. Alagh is credited with the rejuvenation of Britannia with new products like Tiger and Little Hearts.
Alagh had stunned everyone with his late April announcement that he would not be seeking an extension of his tenure, which was to expire in February 2004.
The company's board, headed by chairman Nusli Wadia, considered Alagh's communication about not seeking extension beyond the contract term at a meeting held in Mumbai late on Tuesday night and decided to terminate his employment from June 4.
The company has not yet said anything about who would be Alagh’s successor.
However, reports suggest that Bombay Dyeing managing director Ninu Khanna might succeed Alagh. The other contender is Nikhil Sen, chief operating officer at Britannia.
Market sources even indicate that Jeh Wadia, younger son of Nusli Wadia, would take over as vice-chairman of Britannia Industries soon.
The turmoil in the boardroom and the uncertainty about Alagh’s successor, surprisingly did not rub off on the Britannia share price.
The share touched an intra-day high of Rs 541 before it touched a low of Rs 530, and closed at Rs 533.05, a gain of Rs 5.25 from its last close of Rs 527.80. Analysts say the announcement by Britannia a few days ago of continuing with the buyback would have done its bit in supporting the share price.
Alagh joined Britannia in December 1974 and was the company's managing director for over a decade.
While the two characters in the central to the controversy are incommunicado, industry circles say there is something more to the dismissal that will unravel over the coming days.