The acquisition of Elior India, a subsidiary of the Paris-listed catering and related services company Elior Group, by a British multinational contract foodservice company Compass Group, has been stalled due to an arbitral order which prohibits Elior India from selling its assets.
The award of an arbitration tribunal in Bengaluru highlighted several governance glitches in Elior India’s conduct with regard to discharging its duties and dues toward its employees.
The tribunal in the arbitration case of Elior India versus its former CEO Sanjay Kumar restricted the sale of Elior assets and directed Elior India to deposit Rs 9 crores as interim relief for dues payable to the former CEO should it decide to proceed with the sale.
“The First Respondent is prohibited from alienating or transferring its business/assets/contracts to any party till the disposal of this arbitration,” the order said.
The Arbitral Tribunal’s order said that with regard to the long-term Incentive dues payable to Kumar, Elior India, “having failed to have the amount calculated by an expert within two months following the date on which the annual accounts relating to the financial year ended on the maturity date, cannot take advantage of its own failure by contending that no amount is shown to be due.”
In its order, the tribunal said there were irregularities in the financial conduct of Elior India, including non-filing of financial statements for 2021, on which it observed “….. that the First Respondent has not produced the audited financials for the year 2021. It has however produced audited financials for the year 2022 which is dated 31.10.2022 prepared after the Claimant made the application for interim measure dated 13.10.2022…”
Elior Group in an annual report of 20-21 published from Paris in France, released to the stock market there, stated that “Elior India is not included in the reporting scope as part of this entity was sold in 2020-2021 and the unsold part is not material at Group level in terms of both revenue and number of employees (€13.7 million revenue in 2020-2021, i.e. 0.37% of consolidated revenue, and 1,084 employees, i.e. around 1% of the Group’s total workforce).
Elior India now only operates in the business and industry market with Western companies, which are aligned with western regulations. The Group, therefore, considers that the non-financial risks within this entity are minimised, enabling it to be excluded from the reporting scope this year.”
This arbitration is expected to come to a close over the next few months.
Source: Business-Standard