Calcutta, May 23: A Mumbai-based proxy advisory firm has urged shareholders of TIL to vote against the company's decision to hive off its Caterpillar dealership business to Delhi-based Goodearth Minetech Private Limited (GMPL) for Rs 350 crore.

Stakeholders Empowerment Services (SES) said lack of disclosure with respect to performance and financial details of the companies to be sold, details of the buyer and the inherent conflict of interest were the main reasons for its recommendation against the special resolution.

Voting by postal ballot commenced on April 24 and closed today. The results are expected by May 25. TIL shares were down 0.62 per cent to Rs 289.50 on the BSE. The resolution will pass if votes cast in favour are three times the votes against.

The transaction involves the sale of Tractors India Private Ltd, which housed Caterpillar's dealership of earth-moving and road construction equipment, along with two overseas ventures. KPMG and Grant Thornton valued the business at Rs 350 crore. The company expects to earn additionally from the sale of Nepal and Singapore businesses.

According to SES, the conflict of interest stems from the fact that Sunil Chaturvedi, who is the managing director and CEO of TIPL, is also a director of GMPL.

"A managing director of a subsidiary is allowed to set up a private firm (incorporated March 1, 2011) and then manages to convince the company (TIL) to sell the subsidiary to his own firm... reflects absolute failure of governance," SES said in a report.

"How come GMPL with a paid-up capital of Rs 100,000 is going to support a business which is being sold at a price of Rs 350 crore plus. And if it is being supported by the current managing director, shareholders would certainly like to know his source of funds," SES added.

"In the first step, the business is being transferred to GMPL, which is declared not as a related party and which may be supported directly or indirectly by a third party which could turn out to be a related party in the end. Once shareholders approve, further transactions will not need approval from any one and the business can be transferred to any related party who may be supporting the transaction from a distance at present," SES said.