Why did former Micromax chairman Sanjay Kapoor quit?

The exit of Sanjay Kapoor, the former chairman of Micromax Informatics Ltd, in August was spurred by alleged differences over valuation of his personal stake in the mobile handset company and non-issuance of 1% employee stock option plan (ESOP) offered to him at the time of his joining, revealed sources and letters on the Ministry of Corporate Affairs’s (MCA) website.

Sanjay Kapoor

Till now, it was believed that Kapoor had quit the second-largest smartphone company because he differed on strategic matters with the promoters – Rahul Sharma, Rajesh Aggarwal, Sumeet Kumar and Vikas Jain.

The former chairman’s resignation letter put up on the MCA website also threatens the Micromax board of dragging them to the court.

A source, with some knowledge of what transpired, claimed that Kapoor had acquired some stake in the Gurgaon-based company when he was offered the post of chairman in 2014. This stake, the source claimed, was bought with his own money and its valuation is also the bone of contention between him and the promoters.

“Besides the ESOPs offered to him on appointment, Kapoor had also bought stake with his personal money. Now that he has resigned (services terminated), there is a dispute over the valuation of this stake too. That is why there is all this mudslinging (by the Micromax promoters).The money that was to come to him (Kapoor) has not come,” alleged the source.

An e-mail sent to Micromax by dna seeking its response did not elicit any response.

Kapoor has reportedly accused Micromax of “illegally” depriving him of his stock options. On August 7, Micromax board revoked stock options granted to him.

Another source said Kapoor, who drew a salary of over Rs 5 crore annually, did not need to resort to embezzlement such as misappropriating fuel bill, as was being alleged in a letter written by one the promoters of Micromax.

The accusation of inflated fuel bill is the basis of Kapoor’s termination in Sharma’s letter of July 10. The former chairman, who had worked with major companies like Bharti Airtel and Xerox in the past, has vehemently refuted these charges saying there were no cash transactions involved in fuel costs at Micromax.

“(Why would) a person who has number of stock options misappropriate fuel bill amount? This kind of accusation is totally baseless. I know him (Kapoor) since long time back. Why would a man, who makes a salary of around Rs 7-8 crore per year, indulge in such a petty crime?” asked the source.

The source also wondered why promoters suddenly turned hostile after giving out a statement, post Kapoor’s departure from the company, where they “wished him luck for all future endeavours”.

The source said Kapoor, who had worked with Bharti Airtel as CEO, India and South Asia before joining Micromax, had brought in many professionals onto the company board which was previously promoter-led.

The mobile phone company has had many high profile exits in the past too. Its co-founder, and then managing director Rajesh Aggarwal had reportedly quit after he was arrested by the CBI, along with another company executive Manish Tuli, on bribery charges in August 2013. A little later, in October last year, Deepak Mehrotra had resigned as its CEO. Earlier this year, Ajay Sharma, smartphone business head, had parted ways with the company to join Obi Mobiles.

According to information on MCA website, the company’s authorised share capital is Rs 250 crore and paid-up capital, Rs 195.56 crore. The company currently has 14 directors.