Gillette Ponders Over Stake Hike In Ispl

Gillette is working on a strategy to hike its equity stake in Indian Shaving Products (ISPL) from 51 per cent to 74 per cent. Gillette has hired numerous international consultants including Ernst & Young has for advice on ways and means to increase the stake without a major outgo in funds for the multinational consumer appliances company.

The consultants have advised the appliances multinational to either -- buy out 20 per cent equity share in the company which is presently held by Saroj Poddar and pick up the remaining 3 per cent through public offer, or hike its stake in ISPL by 23 per cent through allotment of preferential equity share.

 

However, Saroj Poddar, the Calcutta based businessman who holds 20 percent equity in the company, has categorically refused to sell his shares in the company to Gillette.

When contacted by Business Standard, Saroj Poddar confirmed that he was aware of Gillette's plans of capital restructuring which includes consolidation of business interests.

However, he stated that he was not interested in selling his stake in ISPL to the European company. "I shall not sell my stake in ISPL to anybody in the near future", Poddar reiterated.

However, he added that Gillette had not yet placed any firm proposal regarding the capital restructuring exercise before him.

"I have not been approached by Gillette till now to sell my shares to them. They have not discussed the matter with me till now," he added.

Besides refusing to sell his stake in the company to Gillette, Poddar also expressed reservations about Gillette's ability to increase its stake through allotment of preferential equity share or mop it up through public offer.

The multinational appliances company is exploring alternate options to execute the proposed capital restructuring exercise.

Speaking to Business Standard, a Gillette spokesperson confirmed the capital restructuring move, saying, "Gillette is looking at ways and means to increase its equity holding in ISPL to 74 percent.

It has employed some consultant firms to identify alternate ways to institute this restructuring exercise.

However, hiking stakes through allotment of preferential equity share is an expensive route at present. We are exploring various other options in this regard and open to suggestions."

The scrip of ISPL has shot up sharply in the last four months. Whereas in April end the price of the scrip was Rs 451, in the current month (ending July 25) the scrip is ruling at Rs 621.

While the market is already reacting sharply to rumours of a Gillette takeover, industry sources point out that the multinational would not be keen to pick up shares through an open public offer when its scrip was ruling so high.