Jk Consolidates Hold On Vikrant

J K Industries Ltd has managed to wrest virtual control over the Vikrant Tyres Ltd management by ensuring the nomination of both the chief executive officer and an executive director from its fold on the newly reconstituted board.

While JK's nominee for the CEO post will also act as managing director of Vikrant, K K Misra may continue as the chairman for the time being.

A special resolution to this effect was passed at a EGM held at Mysore on Thursday. The meeting decided that equity holding in the company be offered to JK by fresh issue of shares in VTL, and dilution of equity by Karnataka State Industrial Investment and Development Corporation Ltd (KSIIDC).

 

This will enable JK to have an expanded equity capital of around 37 per cent of Vikrant. JK, which is the strategic alliance partner of Vikrant, has already offered to pay Rs 76 a share to KSIIDC. Also, it would make an open offer to the remaining shareholders of VTL to acquire shares at the same price of Rs 76 to take its shareholding to 51 per cent.

The special resolution resolved that the board be re-constituted and control of the company be vested with JK Industries as soon as the proposed preferential allotment of shares and disinvestment of 4,82,298 equity shares by KSIIDC in favour of JKI is completed. After disinvestment, KSIIDC will be left with 26 per cent shareholding in VTL.

The resolution gave JK the right to nominate up to nine of the total of 16 directors on the board of VTL, thereby leaving the control of the company to it. KSIIDC will have the right to nominate up to four directors.

However, KSIIDC, which is the principal shareholder of Vikrant Tyres, will have the right to nominate the chairman of the company to the board.

The JK group has already agreed to modernise and expand the VTL plant at Mysore, involving a capital expenditure of Rs 260 crore over a period of Rs four years. This will be met out of its contribution to equity and term loans to be raised by VTL.

Vikrant has a total of 1,66,34,487 equity shares of Rs 10 each, out of which KSIIDC holds 42.97 per cent shares; financial institutions 33.46 per cent shares; commercial banks and corporate bodies 5.38 per cent, while the public hold 17.81 per cent shares.