Kartar Singh, chairman of Thakral, has written a letter to shareholders to oppose the resolution by the two Hong Leong subsidiaries to remove him as director of Thakral Corp.

Venture Delta Ltd and Grace Star, the two subsidiaries of Hong Leong Asia, claim they are concerned about the age of Kartar Singh as he is 74 years old and whether he is able to continue with his role as executive director and chairman. According to Section 153 of the Companies Act, the retirement age for company directors is 70.

Kartar Singh replied in a letter to shareholders that he is able to continue on. He points to his experience of having been through many boom and bust cycles.

Singh believes the group’s consumer electronics business can be profitable again, but the return on capital from the distribution business alone is not sufficient and may not be justifiable.

He believes there are new opportunities in Pan Asian property – the majority of the board had voted to change Thakral’s core business in May. He ended his letter by assuring the shareholders that he has the energy, drive and will to continue as director and chairman of Thakral.

Thakral’s Extraordinary General Meeting will be held on 15 October and shareholders will decide whether Kartar Singh Thakral will stay on the board.

This stock is not covered by Reuters. It was last traded at S$0.04.

~ Jin San’s take ~
Hong Leong had attempted a takeover of Thakral in 2006, but it fell through. With this attempt to remove Kartar Singh from the board, it is most likely seeking to appoint an insider, or a few insiders, in Thakral’s board to speed up the turnaround of the ailing business.

In the event Singh leaves, it is not certain whether the other two members of the Thakral family will stay on as well.

On Hong Leong’s end, its company culture is not very predisposed to revealing its intentions clearly. We are looking to 15 October to provide an ending to this rather dramatic event.

As always, please see your licensed financial advisor before making any investment decisions.