Ugro Capital Responds to Concerns Raised by Proxy Advisory Firm

UGRO Capital Rebutts Proxy Advisory Firm Concerns over Re-appointment and Compensation of Vice-Chairman

In a regulatory filing to stock exchanges, MSME-focused Non-Banking Financial Company (NBFC) UGRO Capital has dismissed concerns raised by a proxy advisory firm over the re-appointment and salary compensation of its Vice-Chairman and Managing Director, Shachindra Nath. The proxy advisory firm has advised its institutional investor clients to vote against the resolution for the re-appointment in the upcoming annual general meeting scheduled for May 29.

According to the filing, UGRO Capital alleged that the proxy advisory firm has routinely advised against the appointment of managing directors of comparable NBFCs. In each case, the compensation was similar or higher, and shareholders rejected the advisory recommendation, with the respective individuals continuing in their roles today.

The proxy advisory firm's primary concern was the proposed share price-linked variable pay component, which the firm characterized as akin to cash-settled Stock Appreciation Rights (SARs) prohibited for promoters under SEBI's share-based employee benefits regulations. However, UGRO Capital stated that any compensation determined will be benchmarked independently against comparable companies, with the sole objective of aligning the founder's interests with those of all shareholders.

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In a statement, UGRO Capital Chairman Satyananda Mishra emphasized that the variable pay resolution will be fair, market-referenced, and never excessive - only alignment, never enrichment. He also highlighted Nath's personal commitment to the company, including voluntarily guaranteeing Rs 1,830 crores of the company's borrowings without a single rupee of commission or fee.

The purchases increased the cumulative promoter holding to 2.88 per cent of the company's total diluted share capital. Nath founded UGRO Capital in 2018 and built it from a dormant listed shell into India's first listed MSME-focused DataTech lending NBFC, enabling more than Rs 2,500 crore of equity capital raises over eight years. His own shareholding was diluted to below 3 per cent as a direct consequence of the company's growth, not disengagement.