Bhushan's Singhal brothers at war again

Bhushan Power and Steel promoter Sanjay Singhal today made an open offer for Orissa Sponge Iron, a company in which his younger brother Neeraj Singhal has 14.8 per cent stake. Neeraj is Bhushan Steel’s managing director.

Sanjay said the open offer was to protect the interests of Orissa Sponge’s existing promoters so that no one made a hostile bid for the company. “We have a strategic alliance with Orissa Sponge Iron. Our steel plant in Orissa was the first greenfield plant in the state,” he said.

“After the open offer, we will have a majority stake in the company since the existing promoter, PK Mohanty, has around 41 per cent. Bhushan Power and Steel has a nominal shareholding in Orissa Sponge through friends and associates,” added Sanjay.

Younger brother, Neeraj, however, completely distanced himself from the move and said that he had absolutely nothing to do with the open offer made by Bhushan Power and Steel.

“We now have 14.8 per cent in Orissa Sponge Iron,” said Neeraj. When asked whether Bhushan Steel would scale up its holding in Orissa Sponge Iron and then make an open offer, Neeraj said, “We will take a call in a few days.”

According to the Securities and Exchange Board of India (Sebi) regulations, if the shareholding crosses 15 per cent, it would trigger an open offer.

Bhubaneshwar-based Orissa Sponge is understood to have iron ore and coal reserves of around 120 million tonnes each along with sponge iron and billet making plants.

According to information filed with stock exchanges in December, promoters in Orissa Sponge have 41 per cent, institutions 16.40 per cent, corporate bodies 26.10 per cent and individuals 15.88 per cent, while the rest was with the public.

Sanjay said the existing promoters did not have the required funds to make an open offer and hence he stepped in. The open offer at Rs 300 a share was being made by Bhushan Power and Steel along with Titanic Steel Industries and Olympian Steel Industries.

The two brothers have a long history of animosity. Sanjay has nothing to do with Bhushan Steel now (it is controlled by Neeraj who along with his father ousted Sanjay from the company) and has promoted Bhushan Power and Steel.

Bhushan Power’s open offer is for Rs 300 a share and will start on April 3 and close on April 23. The offer price is at a premium of 91 per cent over Friday's closing price of Rs 157.25 on the BSE. The shares surged nearly five per cent on Friday.