Groundhog Day: Digilife Tech’s countless board, management shuffles

THE comings and goings at Catalist-listed Digilife Technologies may appear unsettling for investors – and for good reason too.

It almost seems as if the company, formerly known as Sevak, has been running around in circles for too long.

And if the company’s name – Digilife Technologies – does not immediately connect to memory, don’t fret – it has changed its name four times in just over a decade to reflect a change in business strategy that has thus far been rather skin deep. Its core businesses remain selling telco products, mainly mobile prepaid cards in Indonesia, and providing tech solutions in India.

Digilife returned to the black with a S$540,000 net profit for the nine-month financial period ended December 2022 (it said last November that it was changing its financial year-end to December) from a S$7 million loss over the 15-month period up to March 2022.

Even so, the road ahead lacks clarity as its existing businesses face margin pressures while the company evaluates yet another fresh business, this time involving “new age construction material technologies into large real estate market”.

The one constant, however, has been the never-ending stream of changes at the company’s board and senior management levels over the years, which came to another head more than a week ago.

On Jun 16, Digilife announced that its controlling owner Bhupendra Kumar Modi was stepping down as executive chairman and group chief executive officer. Quite glaringly, the key leadership change at the company was effective Jun 23 and hence involved a short notice period of one week.

The 74-year-old India-born Singapore citizen informed the company that since its business operations are “stable now”, it was the “right time” to step down and bring in “existing senior professional management to take the company forward”. The announcement went on to add that as Modi has been “preoccupied with other personal commitments”, he would be unable to commit time to oversee the company’s day-to-day affairs.

Last Friday, Digilife announced that it has appointed Mukesh Khetan, who resides in India, as executive director and group CEO, and redesignated its executive director Chada Anitha Reddy to executive chairperson.

This latest movement could renew some concerns over the continuity of Digilife’s board and management, which has long eluded the company.

Modi himself has been Digilife’s on-and-off chairman since 2009. In 2013, he handed his chairmanship to his son, only to be back on the saddle in 2015. The cycle repeated itself in 2018 – he stepped down citing personal preoccupations and then rejoined the board in March 2020. Then, just over a year ago last April, he was redesignated to the positions which he last week vacated from.

The rapid changes at the company’s board and management levels over relatively short spans suggest that Digilife has yet to proactively develop a cohesive succession plan. In May, the company’s nominating committee’s (NC) appointment of an independent director with no prior experience as a director of a Singapore-listed company was also queried by the Singapore Exchange Regulation.

On Monday (Jun 26), the Securities Investors Association of Singapore (Sias) issued a set of questions to Digilife following the latest developments, which it said were “puzzling and worrisome to shareholders”.

Referring to the frequent board changes, Sias sought clarity on the NC’s selection criteria and nomination process and more specifically – among others – how the recent appointment of Khetan and the redesignation of Reddy aligned with the group’s strategies.

In the letter obtained by The Business Times, Sias president and CEO David Gerald asked the company: “What experience does Khetan have leading a Singapore-listed company? Did the board consider the effectiveness of the director given that his principal residence is India, the group’s main businesses are in Indonesia, and the company is a Singapore-listed company?”

As for Reddy, Gerald referred to the company’s disclosure that she has had 22 past directorships for the last five years, with 11 of them being struck off. “How did the NC assess that Reddy has the experience and relevant track record to lead the group and create long-term sustainable value for shareholders...?”, he asked.

For far too long, Digilife has been distracted from its business priorities as it sought to fill the vacancies resulting from the multiple exits at both the board and management levels. The absence of a sound succession plan has also led to a loss of investor confidence.

The time is long overdue for the company to prioritise having in place a smooth leadership and board transition plan and one that is committed to picking candidates with calibre, to meet its current and future needs. Until then, it is likely to find itself in limbo – again and again.