Balrampur Chini Seeks Nod To Up Tulsipur Stake

Balrampur Chini Mills (BCML) of the city-based Saraogis has approached the central government for approval to acquire up to 71 per cent stake in Tulsipur Sugar Company.

Balrampur Chini, along with trading arms Pampa Properties & Investments and Kaveri Estates, has made an open offer for 20 per cent of Tulsipur's stock under the Sebi takeover code.

Under a memorandum of understanding (MoU) with Tulsipur the three companies together had picked 51 per cent of the equity.

Under the memorandum of understanding, BCML picked a 29 per cent stake with 11 per cent each being acquired by Pampa and Kaveri.

 

If the government approval is received, Balrampur Chini says it would not only complete the 20 per cent open offer, but also acquire the stake held by the two arms.

This would take Balrampur Chini's total holding in Tulsipur to 71 per cent.

Under Section 372 of the Companies Act, 1956, government approval is necessary for a company to increase its holding beyond 30 per cent.

BCML needs this approval to acquire the shares through the open offer.

If the company fails to obtain the approval, BCML's trading arms can pick the same.

The company has already obtained shareholder approval for the same at the recent extra-ordinary general meeting.

The BCML management proposes to induct their chairman K N Saraogi, joint managing director, Meenakshi Saraogi, and managing director, Vivek Saraogi, on the Tulsipur Sugar board after the acquisition.

However, the composition of the board of directors in Tulsipur Sugar post-acquisition will be determined only after all the formalities relating to the offer has been completed, as per the letter of offer.

Assuming the clearances and a full acceptance of the public offer, Balrampur Chini Mills would hold about 71 per cent of Tulsipur Sugar, while the non-resident Indians, mutual funds, nationalised banks and public stake would dip to about 29 per cent from the present 49 per cent.

For the open offer the company has procured from Deutsche Bank a bank guarantee for Rs 130 crore in favour of Infrastructure Leasing & Financial Services, the manager to the offer.