The Telegraph
Since 1st March, 1999
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Kolmak gets Sebi nod for BSL open offer

Calcutta, Oct. 28: The Securities and Exchange Board of India (Sebi) has finally granted its approval to Kolmak Chemicals’ open offer for 30 per cent stake in BSL Ltd — the textile major formerly known as Bhilwara Synthetics Ltd.

Kolmak received the market regulator’s clearance late last week. SBI Capital Markets — the merchant banker managing the open offer — is discussing the revised schedule with Sebi, and it is likely to be finalised within the next couple of days.

The offer was supposed to open on September 30, but due to objections raised by the management of BSL, clearance to it was withheld. Sebi has asked the Kolmak management — led by jute baron Ghanshyam Sarda — to make certain modifications to the letter of offer.

The Sardas had made a “conditional” offer to buy 30 per cent of the company’s shares at Rs 80 apiece. This implies that if the offer is not fully subscribed, the Sardas will not buy any shares at all. These features of the offer have been kept unchanged.

Though the offer has been cleared, Sebi continues to probe whether the Kolmak management had sent the letter of offer to BSL in proper time. The promoters of BSL — the Churiwals and Jhunjhunwalas — had alleged to Sebi that the letter of offer was not sent in time for them to consider a counter-bid. Even if Kolmak is found to have violated the norms in sending a copy of the offer to the BSL management, the offence will not have any significant bearing on the open offer.

This is the first hostile bid for the management control of a company in a long time, but it is unlikely that the Sardas will manage to topple the BSL management.

The Sardas have so far bought close to 12 per cent stake in BSL from the market. They can raise their stake in the company to 42 per cent through the offer, which is marginally higher than the promoters’ stake of 41.06 per cent.

The Jhunjhunwalas and Churiwals are confident that the Sardas’ offer will not be fully subscribed. Ravi Jhunjhunwala, a promoter-director of BSL, said the management did not feel threatened by the offer. But there is no dearth of confidence among the Sardas either.

The success of the offer depends largely on the participation of the insurance companies and a group of overseas investment companies. The combined holding of the financial institutions and the overseas firms is a shade under 15 per cent. Public holding in BSL is pegged at 28.25 per cent.

The BSL stock closed at Rs 45.20 on the National Stock Exchange. The offer being “conditional”, the market seems to be not much excited about it.

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