| Birla: Share churn
Mumbai, Aug. 19: Three AV Birla group companies — Hindalco Industries Ltd, Grasim Industries Ltd and Indian Rayon and Industries Ltd — have sold their way out of Indo Gulf Fertilisers at a price of Rs 75 per share.
This follows an open offer made by TGS Investments & Trade Pvt Ltd, a group investment firm, in June to mop up 20 per cent of Indo Gulf at Rs 75 apiece.
Indo Gulf today informed stock exchanges that TGS Investment & Trade Pvt Ltd purchased 1.34 crore shares through the open market, representing 29.72 per cent of its subscribed and fully paid-up share capital.
Hindalco parted with 39.15 lakh equity shares, which made up the entire chunk of its 8.68 per cent equity in the fertiliser major, for a consideration of Rs 29.37 crore.
Grasim Industries surrendered its 55.28 lakh equity shares, amounting to 12.26 per cent of Indo Gulf’s equity capital, in deals that were valued at Rs 41.46 crore.
Indian Rayon & Industries Ltd divested 39.15 lakh shares of the fertiliser company in exchange for Rs 29.36 crore. This accounted for its entire 8.68 per cent stake.
While making the open offer, the promoters’ stake in Indo Gulf was 31.6 per cent, jointly held by Hindalco, Grasim, Indian Rayon and TGS. If the offer is fully subscribed, the expectation is that their holding will rise to 51.6 per cent. The stake reorganisation is estimated to cost the Birlas Rs 68 crore.
Though the open offer price was welcomed initially by the market since it was higher than the average price in the 26 weeks before it, analysts turned critical later when they realised that the Kumar Mangalam Birla-headed group was paying much less than Indo Gulf share’s book value of Rs 107 each. With prospects of better growth after good monsoons, hopes the deal would be attractive were high.
Indo Gulf is among the urea producers that have managed to run their businesses with a tight lid on costs. Abundant rains in the past few months have led industry analysts to believe that it would reap a rich harvest.
The open offer, which opened on July 31 and closes on August 29, has been made by the Birlas to consolidate their holdings in Indo Gulf and raise stakes in key group firms. The company reported a profit of Rs 172.79 crore on a turnover of Rs 700 crore in 2002-03.