Raju Hands Over Raasi To Icl

Raasi Cement chairman and chief promoter B V Raju yesterday capitulated and agreed to offload the promoters entire holding of 32 per cent to India Cements at prices ranging between Rs 200 and Rs 286 a share.

Although the price struck by the promoters is less than India Cements open offer price of Rs 300 a share, it offered a profit over yesterdays official Bombay Stock Exchange close of Rs 181.90. The scrip was traded at Rs 202 on the kerb. Over 64,000 Raasi shares worth Rs 1.2 crore changing hands during official trading on the BSE.

As a result of yesterdays deal, India Cements, which had made a hostile bid for Raasi last month, will consolidate its holding in Raasi to 53 per cent from the current 21 per cent.

After bagging 20 per cent from its open offer and 12 per cent from other Raasi shareholders, India Cements expects to end up with a stake of nearly 85 per cent. ICL is targeting Mumbai-based transporter V Babarias 6 per cent stake in Raasi. Another six per cent will be acquired through negotiated deals from other associates including financial institutions, said sources.

The total cost of the acquisition is slated at Rs 380 crore, the second largest in Indian corporate history after Polysindos acquisition of JCTs synthetic fibre unit and the largest by any Indian company. The acquisition will also make India Cements the second-largest cement company in the country.

India Cements will fund the acquisition through a mixture of a rights issue, a preference share issue, debt and internal accruals.

The deal was swung after hectic parleys over the weekend in Hyderabad between B V Raju, India Cements vice-chairman and managing director N Srinivasan and representatives of DSP Merrill Lynch India Cements advisor.

The Raasi board will be re-constituted after the conclusion of the open offer and the company will be merged with India after all regulatory approvals are obtained, said Srinivasan.

Sources close to the deal said ICL plans to expand Raasis capacity further by investing Rs 15 crore in de-bottlenecking. This would result in the Raasi plants capacity rising to 2.5 million tonnes per annum (tpa) from 1.75 tpa. Returns from Raasi are expected to be Rs 54 crore in the first full fiscal year. The mix for the Rs 200 crore rights issue and private placement will be decided within the next fortnight, the sources added.

Srinivasan said a restructuring might see non-cement subsidiaries being sold off. Raasis subsidiaries, Telangana Paper Mills and Raasi Ceramics are loss-making ventures.

B V Raju, who had earlier vowed to oppose the India Cements offer, gave in after the Andhra Pradesh High Court lifted the stay on the India Cements open offer.

An agreement in this respect was signed early yesterday morning between RCL and ICL Financial Services Ltd, ICL Securities Ltd and Trishul Investments (P) Ltd, the three ICL group companies which had made a public offer to mop up 20 per cent of Raasi shares at Rs 300 a share.

Sri Vishnu Cements is not a part of the deal as shares of this company have already been transferred from Raasi Cements to other group companies.

The different factions of the Raasi promoters will receive different prices, ranging from Rs 200 and Rs 286 a share, for their holdings. Financial institutions, which hold 20 per cent in Raasi have been left high and dry as India Cements has comfortably taken over the company without buying a single institutional share.

As per the agreement between ICL and Raasi promoters, ICL will immediately give a bank guarantee and remit the share price within 60 days. According to a Raasi spokesman, ICL will buy the shares at Rs 300 a share or a little less.

The proceeds for the promoters will be around Rs 150 crore, a Raasi spokesman said.

The brand name Raasi will be the property of ICL and B V Raju will not use it in respect of cement. Rajus existing undertakings named after Raasi, like Raasi Ceramics Ltd, will retain their names.