Dalmia Offers To Buy Back Giic Stake In Ghcl
Gujarat Heavy Chemicals Ltd (GHCL) promoter Sanjay Dalmia has offered to buy back the 15.68 per cent stake held by Gujarat Industrial Investment Corporation (GIIC) in his company. However, at Rs 26 per share, Dalmias offer is unlikely to find favour with GIIC. The FI has already been approached by the Karsanbhai Patel-owned Nirma Ltd to sell its stake at Rs 40 a share.
The GIIC board is meeting early next week to decide its stance, but observers say a fresh bout of political uncertainty in the state may hamper an early decision by the FI.
GIIC sources say they may take the matter to court if Dalmia does not revise his price. GHCLs shares are currently quoting at Rs 17.5 on the BSE.
As part of its policy of reducing its involvement in most private sector ventures, GIIC had decided to offload its 15.68 per cent stake in GHCL. It was approached by Nirma, which wanted GHCLs captive soda ash consumption for its soaps and detergents production. Nirma had earlier been turned down by Dalmia when it approached him directly.
GIIC, however, had given Dalmia 90 days to decide whether to buy back the stake or not, failing which the FI would offload the shares to the highest bidder.
Contacted in Delhi, Dalmia said he had sent a letter indicating my willingness to buy GIIC shares. However, he refused to divulge the offer price, while insisting that the share price will be worked out as per a pre-determined formula in the agreement or an average of six months stock price, whichever is higher.
I am awaiting a response from GIIC, Dalmia said. If the deal goes through, Dalmias equity in GHCL will rise to about 41.68 per cent from the current 25.99 per cent. Dalmia will have to pay Rs 37.91 crore for the 15.68 per cent stake.
Considering the financial status of his group companies, market observers wonder whether Dalmia will be able to raise funds to ward off Nirmas takeover bid.
Except for Gujarat Heavy Chemicals, Dalmias other group companies, such as GTC and Dalmia Industries, have been facing a severe financial crisis. Group flagship GTC Industries has been referred to the Board for Industrial and Financial Reconstruction (BIFR) while Dalmia Industries net profit declined to Rs 83 lakh in 1996-97 against Rs 2.8 crore in 1995-96.
Dalmia insisted that he has already tied up resources to pick up equity in the profit-making GHCL. I have made all the arrangements (for funds), he claimed. GIICs response may be delayed as the state government is unstable. I am awaiting a response from the corporation soon, Dalmia added.