Classic Stripes: a tightrope walk
Kishore Musale, the promoter of Classic Stripes has stepped down as the managing director of the company subject to excessive interference and mismanagement by Navis. According to a leading financial daily, Musale, in his resignation in October 2014 to the board of directors wrote, ‘Navis has thrust itself on the company which has led to a situation that is 'slipping and beyond redemption'.
05 Nov 2014 | 7380 Views | By PrintWeek India
In 2011 Navis Capital, the Asia-focussed fund invested $100 million in Mumbai-based Classic Stripes to purchase 51% stake in the company.
The precise reason for the conflict between the promoter, Musale and the fund, Navis, is still unknown. When PrintWeek India tried to contact them, they remained unavailable for a comment or clarification.
In the past decade, several expensive buyouts have made news for all reasons good and bad. The private equity firms gain access to those companies' assets and revenue sources, which can lead to very high returns on investments. However, this translates in to pressure mounting on the promoter to make highly ‘profitable decisions’.
There have been instances where the fund management has been inaduequate for the business operations.
According to an official from a leading private bank, "The equity managers, are eyeing return on their equity. In addition, they have stringent accounting systems in place. This tends to be an impediment for owner driven companies. False reporting of the accounts or even the slightest balance sheet manipulation is unacceptable to a venture capitalist."