HB Stockholdings may bid farewell to Shriram Industries

After a 235% rise in share prices, firm plans to sell its stake in the sugar company

After being stuck for years in a takeover battle for New Delhi-based DCM Shriram Industries, HB Stockholdings will try to sell its 25 per cent stake in the sugar company.

HB Stockholdings was promoted by stockbroker Harish Bhasin, who died in 2010. His son, Lalit Bhasin, is the chairman. DCM Shriram Industries is owned by a branch of the Shriram family.   

The change in stance for HB Stockholdings was prompted by a 235 per cent jump in the BSE-listed sugar maker DCM Shriram Industries’ stock price over past 11 months.

Stocks of all sugar companies have seen a strong rally in recent months, thanks to a projected dip in output after years of surplus. Sugar prices have moved up sharply, making investors bet big on their stocks.

“We are examining our position and evaluating options. The sugar sector seems to be on a bull run. We may make a full or partial exit from the stock at an appropriate time. It can be through the open market or a placement,” Anil Goyal, director, HB Stockholdings told Business Standard.

Goyal, an old hand at Bhasin’s company, said no time frame had been fixed.

Tilak Dhar, a promoter as well as chairman and managing director of DCM Shriram, declined to comment when asked if his company would like to buy the 25 per cent stake.

Industry experts said it does not make sense for Dhar to invest in these stocks since the promoters already have a 44.52 per cent stake.

DCM Shriram’s stock hit a 52-week high of Rs 184 on Thursday, rising sharply from its 52-week low of Rs 55 in August last year.

The company made a profit of Rs 24 crore in the March quarter of FY16 against a loss of Rs 6.7 crore in the corresponding quarter of the previous year.

HB Stockholdings will start considering options once the stock crosses Rs 200. It has acquired about 12 per cent stake in the company between 2007 and 2008 at an average price of Rs 125 per share.

At current market price, the value of 25 per cent stake comes to about Rs 76 crore. HB Stockholding has not gained much after spending crores to ramp up his stake except a few crores in form of dividends.

The company does not even have a board representation in DCM Shriram.

Harish Bhasin, who was once a broker for the London-based non-resident Indian Swraj Paul, had made takeover attempts on DCM and Escorts in 1983. While the attempts were foiled because of government intervention, he was left with 12.87 per cent in DCM Shriram Industries, one of the splinter groups formed after the split of DCM in 1990.

In 2007, Bhasin’s firm raised its stake to 25 per cent through open market purchase and an open offer. Alarmed at this, the promoters upped their stake from 32.54 per cent through an issue of warrants. Harish Bhasin then approached the Company Law Board claiming the move was against the interests of the minority shareholders.

ENTRY & EXIT
After being stuck in a takeover battle for years, HB Stockholdings might sell its stake in DCM Shriram industries

• 1983: Stockbroker and promoter of HB Stockholdings Harish Bhasin attempts to take over DCM and Escorts. Stopped by government intervention
   
• 1990: DCM splits; Bhasin left with 12.87% stake in DCM Shriram Industries
   
• 2007: Bhasin’s firm raises stake to 25%. Alarmed, promoters raised their stake from 32.54%. Bhasin tells Company Law Board move against minority shareholder interests
   
• 2016: Shares of BSE-listed DCM Shriram Industries rallies by 235%. HB Stockholdings mulls stake sale