Chairman of Hirco resigns over scandal

Niranjan Hiranandani has resigned as chairman of Hirco, the troubled Aim-quoted Indian property investment company, as he attempts to defend his name amid allegations of irregularities in the handling of employees’ provident funds for other Indian companies.

Mr Hiranandani has also resigned as a director of the company, “pending his name being cleared”.

The company said Mr Hiranandani had resigned following media speculation over inquiries made by the Indian Central Bureau of Investigation (CBI) into his dealings. But it said no formal charges had been laid by the CBI over alleged errors in contributions made to employee funds of companies unrelated to Hirco and noted “Mr Hiranandani’s public rebuttals on the matter”.

Hirco said it had accepted Mr Hiranandani’s resignation as he realised that press coverage of the probe “risks unwarranted damage to the reputation of the company”. It said it offered Mr Hiranandani its continued support.

The resignation is the latest in a wave of troubles to hit the company, set up to invest in landmark residential townships and commercial complexes in India and offer an “unsurpassed living environment” to India’s “large and growing middle class”.

Hirco launched the largest initial public offering on Aim in 2006, raising £383m ($591m) when it made its debut at 500p in December of that year. But its shares collapsed below 100p in 2008 and, in spite of a recovery back above the 200p mark last year, have since fallen back again.

Shares in the company, which have fallen 55 per cent over the past year, edged up ¾p at 71p on Thursday.

In August, Hirco disappointed shareholders by announcing that it expected to pay no dividends before 2013 at the earliest.

In September, following a review of its strategic direction, it also announced a streamlining of the board, which involved Mr Hiranandani’s daughter Priya, Sir Rob Young and Nigel McGowan leaving their posts.

Earlier this month, Hirco reported an annual loss of £13.6m for the year to September 30.

Mr Hiranandani’s resignation from his role as chairman follows attempts by activist investor Laxey Partners to force his departure last year. Laxey failed in an attempt to oust Mr Hiranandani and non-executive directors David Burton and Mr McGowan from the board at an extraordinary meeting in May.

On Thursday, Mr Burton was appointed interim chairman.