Irani's resignation a blow to crisis-ridden Everonn Education

The resignation of J J Irani as chairman of the board of directors of Chennai-based Everonn Education has come as a big blow to the crisis-ridden firm.

Irani quit as chairman of the company on Friday, days after the Central Bureau of Investigation (CBI) arrested P. Kishore, its co-founder and managing director, on charges of paying a bribe of Rs50 lakh to an income-tax officer to hush up a case of suppression of profits.

"I value my name more than anything else," Irani told a newspaper. "I associate myself with corporate governance. A smear has been created and I don't want to associate with a company that is being investigated." The respected business executive said he was not passing any judgement on the company and that his decision was a voluntary one.

The board of Everonn took note of Irani's resignation as chairman and accepted the same while appreciating his valuable services and guidance. It also appointed Susha John, whole-time director, as CEO of the company, and to exercise the powers delegated to the managing director. It also appointed a business council, comprising two independent members, to advise the CEO.

According to the CBI, additional income-tax commissioner Andasu Ravinder - who was also arrested along with Kishore - organised a search and survey proceeding in the company's premises on August 4. It revealed that the managing director had concealed taxable income to the tune of Rs116 crore.

Kishore then allegedly contacted Ravinder through a chartered accountant and asked him to reduce the tax liability. He sought the suppression of Rs.60 crore of taxable income out of the Rs116 crore that was detected, says the CBI. Both parties then decided to settle the issue, with Kishore allegedly paying a bribe of Rs50 lakh to Ravinder. The CBI arrested them while the bribe was being paid.

Everonn, an education provider, operates in the areas of school education, e-content, teacher training and test preparation. It is a listed company, and its stocks have been hammered on the Bombay Stock Exchange. Following Irani's resignation, the scrip fell by 20 per cent on Friday. It had risen to a high of Rs.756.45 on October 7, 2010, but fell to a low of Rs.351.45 on Friday.

Everonn signed an agreement in April with the National Skill Development corporation (NSDC), co-promoted by the Indian government to train 15 million people, as part of the government's mission to impart and upgrade skills. It was to train 15 million candidates in a deal that would have generated about Rs.14,000 crore in revenue for the company over the next 12 years.