Babu George Valavi is in the midst of a titanic, life-or-death struggle. If he wins, he and his four family members would be awarded Rs 1,448.5 crore. Babu Valavi, a Kochiite, began his business career when he purchased 2.8% of Mewar Oil and General Mills Ltd.
At the current share price of Rs 3,410 a share, the Valavi family’s 2.8% ownership in telecom firm Reliance Communications is worth an estimated Rs 1,448.5 crore. Babu Valavi claims that over the years, he and his family were kept in the dark about the company’s success. They are no longer shareholders, according to the firm, because their shares were transferred to others in 1989.
In the 1970s and 1980s, P. P. Singhal, the founder and chairman of PI Industries, and his brother Babu Valavi met in the Bombay business scene. In the 1970s and 1980s, Babu worked as a clearing and forwarding agent for Mewar Oil and General Mills for about a decade. He claims that the company began as an edible oil company, but later expanded into pesticides and that he served as the company’s C&F agent for pesticides in both Kerala and Tamil Nadu.
When the company was seeking a distributor for its product in South India, Babu bought shares in the company. He kept the original share certificates in the cupboard because shares were not traded at the time. His son discovered them in 2015 and requested that PI Industries’ registrars demat them (the process of moving physical share certificates to electronic bookkeeping).
Karvy, in turn, requested that Babu contact the firm. “To our total shock and disbelief, the corporation informed us in September 1989 that our shares had been transferred to other persons,” recounts George K Valavi, Babu’s son. However, under the Companies Act, the shareholder must file a police report, place a newspaper advertisement, execute an indemnity bond, and sign an affidavit in the company’s favour – Babu has not done so.
In January 2016, PI Industries dispatched Rajnish Sarma, now Joint Managing Director, and C.H.N. Rao to Kochi to settle the dispute. They had validated the authenticity of the original certificate, according to Babu, and informed him that the subject would be discussed with the chairman. The investigation into the multi-crore “fraud” is still ongoing, and SEBI is hopeful that an acceptable settlement can be achieved.