NCLT dismisses Philips India plea to buy minority stake over valuation gap

The National Company Law Tribunal has dismissed the petition by Philips India to buy out the remaining 3.87 percent from its minority shareholders, observing a "huge difference" between values determined by the company-appointed valuer and its minority investors.

The Kolkata bench of NCLT though agreed with the "discounted cash flow method" adopted by the valuers appointed by Philips India and its minority shareholders but pointed out a "huge difference" between the price of the share determined by them.

"While petitioner (Philips India) appointed valuer has valued it at Rs 740 per share, the respondent (minority shareholders) appointed valuer has valued in excess of Rs 4,500, by suggesting a range between Rs 4,605 to Rs 6,119," it said.

The tribunal suggested that the situation may require a direction to the registered valuer to disclose the parameters factored while determining the price under the discounted cash flow method to reconcile two vastly different prices determined by two different Registered Valuers while adopting the same method of valuation.

"However, we desist from doing so as we are anyway dismissing this petition on the ground that Section 66 of the Companies Act cannot be invoked under the facts and circumstances of the case," it said.
The bench also said it was not dealing with contentions and counterclaims made regarding the Foreign Exchange Management Act and observed that "in any case petitioner company (Philips India) is willing to comply with any directions as per law" regarding FEMA compliance.