New Delhi, April 24: DCM Shriram Industries appears to have thwarted a hostile takeover bid by HB Stockholdings Ltd.

The promoters of DCM Shriram have increased their stake in the company to 40.71 per cent by converting the warrants allotted to them on a preferential basis earlier this month. DCM Shriram has allotted 9,45,000 equity shares of Rs 10 each at a premium of Rs 80 per share.

Sources said the company had informed the Bombay Stock Exchange (BSE) of the board’s decision. “These shares shall rank pari passu (equal in status) with the existing equity shares of the company,” a resolution taken by DCM Shriram said. HB Stockholdings has informed the BSE that it has increased its stake in DCM Shriram to 25.05 per cent through open market purchases.

Amid news of the hostile takeover bid, the DCM Shriram board in October had approved the issue of 7,00,000 warrants to its promoters, convertible into three shares in three tranches within 18 months. HB Stockholdings, which held about 12.9 per cent of DCM Shriram when it made an open offer at Rs 70 a share, increased the offer price to Rs 120 in response to the issue of the warrants that would be converted to equities at Rs 90 per share.

The stockbroking firm had offered to buy 3.5 million shares in DCM Shriram, citing the low pricing of the warrants. It had also moved the Company Law Board seeking a stay on the issue of warrants to the promoters. The board, however, turned down HB Stockholdings’ plea.

HB Stockholdings founder Harish Bhasin, a Delhi-based stock broker, had earlier fronted for Swraj Paul in his abortive bids to take over the undivided DCM Ltd and tractor maker Escorts in the early eighties. The DCM group was split into four firms — DCM Ltd, Shriram Industries, DCM Shriram Consolidated Ltd and Siel Ltd — two decades back.