Few takers for creeping acquisitions

Indian promoters were in no mood to take advantage of the low valuations of stocks during the January-March period and the change in the limit on creeping acquisitions by market regulator Securities and Exchange Board of India (Sebi).

In the last quarter of the financial year 2008-09, promoters of 248 companies bought shares worth Rs 286 crore only from the open market, while 15 others sold their holdings worth Rs 49 crore through market transactions.

While BILT Paper Holdings, the promoters of Ballarpur Industries, bought a 3.78 per cent stake for Rs 31 crore in March this year, Raja Reddy of Kaveri Telecom Products bought 2.9 per cent shares for Rs 75 lakh, T C Kothari purchased 3.63 per cent shares of OM Metals for Rs 2.32 crore and Trident Chemphar acquired 0.97 per cent in Aurobindo Pharma for around Rs 9 crore at different times during the three-month period.
 

THE BRAVEHEARTS
Company	In per cent Acquired Post acqn

CSS Technergy4.7622.77 Ballarpur Ind3.7837.23 OM Metals Infra3.6310.89 Kaveri Telecom  2.98.97 SMIFS Capital2.522.52 Samtex Fashions2.478.41 Vardhman Holdings4.4425.27 20 Microns Limited3.8213.16 Joindre Capital1.911.91 In Jan-Mar 2009            Source: BSRB

Among others, Ratan Tata bought 100,000 shares of Tata Motors, Harsh Mariwala 150,000 shares of Marico, Century Textiles 94,000 shares of Century Enka, Sudip Dutta 64,374 shares of Ess Dee Aluminium and Ashok Garware purchased 49,928 shares of Garware Offshore during the same period.

Compared to their 52-week high values, the market price of these 263 companies was down by 48 per cent as on March 31, 2009.

However, the promoters were not ready to support the sagging valuations through creeping acquisitions in the period under review. As per the relaxed creeping acquisition norms, promoters can increase their stake by 5 per cent every year through the open market till their holdings reach 75 per cent.

Earlier, an acquisition of over 55 per cent mandated an open offer. Sebi guidelines say that creeping acquisition deals have to be done through the open market.

Any promoter who buys shares through the open market has to disclose changes in the holding pattern, exceeding Rs 5 lakh in value, or 25,000 shares, or 1 per cent of the total shareholding or voting rights, whichever is lower.

The data on open market acquisitions compiled by the Business Standard Research Bureau show that only 14 promoters have pruchased more than 1 per cent stake from the open market pursuant to regulation 13(4) and 13(6) of the Sebi (Prohibition of Insider Trading) Regulations 1992 and 2002.

The promoters of three firms bought 0.5-0.99 per cent, while 27 others bought 0.1-0.49 per cent.