Essel raises IVRCL stake above promoter holding

IVRCL CMD says won?t worry till Essel reaches the 26% open-offer trigger

The Subhash Chandra-promoted Essel Group has raised its stake in IVRCL to 12.27 per cent by purchasing an additional 2.08 per cent stake from the open market, upping the ante for the battle to gain control over the Hyderabad-based infrastructure firm.

The Essel Group now owns more stake than the 11.18 per cent equity held by IVRCL’s promoters.

However, IVRCL chairman and managing director, E Sudhir Reddy, told Business Standard he was not worried about Essel’s stake hike since an open offer could be triggered only at 26 per cent, as per Sebi’s new takeover code.

“It is a long way to go. Let Essel acquire 26 per cent stake and come out with an open offer. Then we will see whom to rope in,” he said.

Two Essel Group entities — Asian Satellite Broadcast Private and Jay Properties Private — had acquired 5.56 million shares of IVRCL on April 2 and April 3, according to a disclosure made to the stock exchanges. Last week, the Essel Group said it had acquired a 10.19 per cent stake in IVRCL through open market purchases.

Disclosing that the Essel Group had not sought any seat on the IVRCL board so far, Reddy said any such requests had to be placed before the annual general meeting (AGM). But, the company has no obligation to call for an AGM at this juncture.

Pointing out that IVRCL was not a manufacturing unit but an infrastructure company, he said it would not be easy to take over and manage such outfits. “In an infrastructure company, management is more about interpersonal relationships. Managing a company like IVRCL, which has 350 work sites spread across 21 states, is all the more difficult (in case of a hostile takeover),” he added.

The IVRCL management is confident institutional investors would go with the company promoters in case of any hostile takeover bid. The company’s executive director for finance and group chief financial officer, K Balarami Reddy, had earlier said none of the institutional investors, which held over 42.5 per cent stake, had “dissatisfaction” with the present management.

Nevertheless, a hostile takeover, even if it is a long-drawn battle, appears to be on the cards, unless Essel says otherwise. IVRCL's incumbent management made it clear last week it did not want to cede control of the company. Essel is yet to spell out its strategy. The IVRCL scrip on Wednesday closed at Rs 71.20 on the Bombay Stock Exchange, up 2.67 per cent over its previous close.