IVRCL promoters to resist takeover

They are expected to chalk out their future course of action

The promoters of Hyderabad-based infrastructure company IVRCL Ltd appear to be gearing up to face a possible takeover battle, in the light of Essel Group acquiring 10.19 per cent stake in the company yesterday.

An indication to this effect was given by IVRCL executive director-finance and group chief financial officer, K Balarami Reddy, here on Wednesday. "If ever there is any hostile bid to take over the company, we will not leave it just like that," he told Business Standard. He said friends and well wishers of the company promoters had already started extending support by expressing willingness to provide funds, if necessary.

The company promoters are expected to chalk out their future course of action in a couple of days after the return of IVRCL chairman and managing director, E Sudhir Reddy, currently in Australia.

Sudhir Reddy said over the phone he had no idea why Essel had acquired a substantial stake in the company. "It is for Essel to explain," he said, adding there had been no communication to IVRCL from Essel yet.

The Subash Chandra-promoted Essel Group, which owns the Zee group of television channels, bought IVRCL shares for an estimated value of about Rs 164 crore through open market transactions.

With Essel Group stating it was keen to further raise its stake in IVRCL, there were questions whether the acquisition was a prelude to a possible takeover. The questions stem from the fact that at 10.2 per cent, Essel Group's stake in IVRCL is already close to the promoter holding of 11.2 per cent. Besides the group, which has Essel Infra Ltd in its fold, stated the acquisition was in line with its philosophy to grow its infrastructure business.

In 2010-11, IVRCL posted a turnover of Rs 5,659.2 crore and a profit after tax of Rs 158 crore. The company has a market cap of Rs 1,556 crore and a free float of Rs 1,401 crore.