Investors tussle over Salima Sugar board
Mother’s Dairy and Energy Farms Limited has taken to court AUM Sugar and Allied Limited alongside Prashant Sharma for removing its representative in the board of directors for Salima Sugar Company Limited.
In a claim filed in the High Court of Malawi Commercial Division in Lilongwe, investor Shirieesh Betgiri is accusing the two defendants, AUM Sugar and Allied Limited and Sharma, of removing him from the board.
Betgiri on April 11 2023 obtained a court order restraining the two defendants from removing him as member of the board of directors. However, the defendants are fighting to have the injunction vacated.
The Malawi Government, through the Attorney General (AG) Thabo Chakaka-Nyirenda, took interest in the case and has applied to join the case as the minority shareholder with a 40 percent stake in the firm.
In an interview, he said: “Our interests in this case are huge. The Government of Malawi is repaying a loan to Export-Import Bank of India it invested in this sugar company. According to records from the Reserve Bank of Malawi, AUM Sugar and Allied Limited contributed $6.8 million towards share capital in the company.
“Additionally, the Malawi Government has over the past years guaranteed loans obtained by the company from CDH Investment Bank Limited as follows; $7 million in November, 2016, $12 million in May 2018, and $6 million in April 2020.”
Salima Sugar Company is a joint venture (JV) in which the claimant and the two defendants hold a 60 The Malawi Government through the Greenbelt Authority holds the other 40 percent stake. percent stake.
Private practice lawyer Wapona Kita, who is representing Betgiri, said the case was supposed to come in court earlier this month but it was adjourned.
He said the case would be coming within a month’s time where he would be asking the court not to vacate the injunction until hearing of substantive matter while the defendants would be fighting to have the injunction vacated.
In his application, Betgiri argued in his skeleton arguments filed at the court that a serious question pertains to whether the defendants lawfully removed him as a board member in Mothers Dairy and Energy Farms Limited.
In November 2012, the National Assembly passed the Export-Import Bank of India (Loan) (Authorisation) Bill authorising the Ministry of Finance to borrow $76.5 million for the project.
According to Section 3 of the Loan Authorisation Act, the loan was supposed to be applied towards the development of irrigation network under the Greenbelt Initiative, setting up a refined sugar processing plant in Salima, and development of fuel storage facilities in Malawi and related goods and services.
According to Clause 6 of the Agreement, the loan was supposed to be repaid within 20 years with a five-year grace period.
The loan repayment was supposed to begin after the expiry of the moratorium period, namely five years.
Out of the $76.5 million loan, $35 million was for the development of irrigation network setting up of refined processing equipment in Salima under the Greenbelt Initiative.
In 2015, government incorporated the Greenbelt Initiative Holdings Limited. GBI is thus a wholly State owned enterprise. The purpose of the company is to undertake commercial irrigation investments.
The Secretary to Treasury held 99 percent shares and Secretary to President and Cabinet held 1 percent shares in GBI Holdings Ltd. Around the year 2022, the shares in GBI Holdings Limited were transferred to GBA.
GBA was established in 2017 under the Greenbelt Authority Act, 2017.
