Detailed report of Yes Bank EGM held on 07-Feb-20 for capital raise

Yes Bank conducted it’s Extraordinary General Meeting (EGM). Below is the detailed report of the proceedings and business conducted at the EGM.

EGM Details

Date: 07-Feb-2020
Time: 11:00 AM to 1:15 PM
Venue: Nehru Centre, Worli Mumbai 18.

EGM Attendees

Management Attendees: Anil Jaggia, Shagun Kapur, Ravneet Gill, Pratima Sheorey, Brahm Dutt, R Gandhi, Maheshwar Sahu, Ravinder Kumar, Subhash Chander.
Shareholder Attendees: 200+ people.

Important Points

Before we start I would like to address a few points so that we discuss further points clearly.

Extraordinary General Meeting (EGM) is different from a Board Meeting (BM) and an Annual General Meeting (AGM).
EGM is conducted with a defined set of business agenda that has to be addressed on an urgent basis.
Apart from the predefined agenda there are no other points, announcements, updates that are meant to be shared in an EGM.
Such announcements or updates are usually given out during board meeting outcomes or annual general meetings.
EGM can be conducted remotely and the shareholder votes can be drawn entirely via the e-voting system (details of which were shared earlier).

EGM Agenda

For the EGM conducted by Yes Bank today, the business agenda was very clear and predefined in the EGM notice shared by the bank almost a month ago.

To increase authorized share capital and consequent alteration of capital clause of the memorandum of association.
To authorize capital raising through issuance of equity shares or other convertible securities.

So, the most important point to note here is that apart from the above 2 points, the management was not expected to give any updates related to other issues like capital raising, resignation of director, etc.

If there would have been any update from the management about any of the issues mentioned above, it would have been definitely welcome but the management was not liable for the same.

EGM Rounds

The EGM was divided into 2 parts:

Shareholders’ Round: Questions / points to be raised by shareholders (allotted representatives).
Management Round: Answers / updates given by the management to the shareholders.

The first part where shareholders raised questions and discussed their points lasted from 11:00 AM to 12:30 PM (which formed 65% of the meeting) and the second part where the management spoke with the shareholders lasted from 12:30 PM to 1:15 PM (35% of the meeting).

Part 1: Shareholders’ Round

In all a total of 16 shareholders raised queries and expressed their opinions. These opinions were divided into 2 types:

Group 1: Those shareholders who were against the management (60%)
Group 2: Those shareholders who were supportive of the management (40%)

I’ll share the points raised by the above 2 groups of shareholders accordingly:

Group 1

The management is slow in terms of raising capital and they’re giving false promises on TV interviews regarding the status of the fund raising.
The salaries of the management (specifically pointed to Mr. Ravneet Gill) are too high and not justified considering their failure to bring in any concrete results in the bank.
About letter submitted by the ex-director Mr. Uttam Agarwal to the RBI and SEBI regarding issues with corporate Governance.
- The management answered to this by saying that this issue was consulted by their legal team and that it has been addressed with the regulator
Issue regarding going with the equity dilution route for raising capital instead of going with other options like share buy backs, convertible debentures, etc. where equity can be preserved.
Role of the ex-RBI director Mr. R. Gandhi on the board. Drastic fall in the stock price of Yes Bank from 400 to 40 levels.
Mr. Shivanand Shettigar (group company secretary) not available for addressing investor queries (not receiving phone calls).
If there are any more hidden NPAs in the balance sheet that the management is yet to disclose.

Overall, this group of shareholders was an angry lot and they blamed the management for everything starting from capital raise to the falling stock price. They pointed out things about the management like their salaries, the cars they use, the hotels they visit, the vacations they take, comparing RG to Rahul Gandhi, etc.

The entire management panel sitting on the stage calmly listened to all the investor complaints and noted down the issues they raised.

Group 2

The management (especially Ravneet Gill) is doing a good job and they need to be given considerate amount of time to get things sorted out.
Shareholders should understand that their investment in the stock of Yes Bank is their choice and that they are not entitled to get a return.
The bank’s current state is due to the wrong doings of the previous management (Mr. Rana Kapoor’s name called) and that the current management team should be supported now so that they can work towards getting the bank on track.

This group of shareholders was applauded by other shareholders sitting in the audience.

Part 2: Management Round

Only Mr. Ravneet Gill (MD & CEO) spoke to the shareholders on behalf of the management panel sitting on the stage. He addressed the following point:

I understand the problem shareholders are facing with low stock price.
We cannot walk away from the balance sheet that we have inherited from the previous management. The only way to solve asset quality issues is to raise capital since lack of time is a big constraint.
Shareholders need to understand that these things will not resolve overnight.
I make a humble request to the shareholders to stay a little patient as these things like NPA resolutions take time. I feel I am personally accountable to each and every shareholder and we’re doing all that we can to make things work.
I can feel the pain of people due to low stock price but I request shareholders to show faith in the management and that they’re working for the good of everyone involved.
The bank genuinely cares about its shareholders and understands their concerns.
All employees of the bank are fully committed and working tirelessly even though they’re going through tough times.
Yes Bank is India’s 4th largest bank and it will take time for a turnaround especially with legacy systems in place.
People need to understand that the financial sector is different from other sectors like manufacturing where the management can stop selling the products and start focusing on different verticals. For financial sector, balance sheet and asset qualities are carried on and have to be taken care of over time.
Financial sector doesn’t thrive in a binary public outlook as people perceive thing as too good or too bad. Things have to be balanced.
As for the ex-independent director issue, we wanted an outside investigation by the best corporate governance. At the time of crises, be it an organization or a nation, everyone comes together and that is how we overcome it.
Have faith in the management and we are working tirelessly to make sure that your aspirations as shareholders are met.
Let’s fight it out together and come out strongly.
Mr. Brahm Dutt (Chairman) concluded by saying that the management will share an update about the EGM e- voting results and Q3 results in the next few days.

Our Outlook

Things seem very heated up due to retailer participation in the stock as retail investors are not know to show patience and want quick results.
Management seems to very focused and knows what they have to work on to resolve the issues at hand.
Mr. Ravneet Gill seems like a man of integrity and is very well suited for the job he is being assigned with. He was very calm, composed and confident about the future of Yes Bank.
He was constantly focusing on one thing and that is shareholders should be patient and have faith in the management. Things will take time to resolve but will turnaround for sure and that the bank will be out of the difficult times that it is currently going through.
We think, given enough time, Yes Bank should be able to come out of this and should be able to get back on its growth track. Time is the valuable commodity that retail investors will have to spare.