Raasi Moves Sebi On Shri Vishnu

Raasi Cement, now controlled by India Cements, has asserted control over Sri Vishnu Cements Ltd, its erstwhile subsidiary. It has also called for a reversal of the transfer of its 39.5 per cent stake in SVCL to a clutch of family companies of B V Raju, Raasi's original promoter.

In a complaint to Sebi, Raasi Cement has also protested B V Raju's proposed move to hike his stake in SVCL by 20 per cent.

"To protect the interest of RCL as well as its shareholders, we request you to look into the proposed offer of Dr B V Raju and the said nine companies and take appropriate action to protect the interest of RCL in sofar as the 40 per cent holding is concerned", the letter states.

 

It accuses the Rajus of committing a fraud on Raasi shareholders by violating the takeover code and the Companies Act.

The letter is signed by Raasi director R K Das and is addressed to O P Gehrotra, executive director, Sebi.

Sebi officials confirmed that they had received the letter and were examining it. Sebi sources also said they have received complaints from other shareholders over the transfer and will give a decision soon.

Last December, to stave off a potential takeover threat, Raasi Cement, then controlled by B V Raju, transferred the company's 39.5 per cent stake in SVCL to nine investment companies owned by Raju and his family.

Thus, India Cements, which was originally hoping to acquire both companies, ended up with only Raasi. After taking over in May, India Cements conducted an internal enquiry into the transaction and found the sale violated both the takeover code and the Companies Act.

The Raasi board met on July 20 to consider the issue. "The board decided to review the entire transaction and take appropriate action to remedy the wrong committed. Hence we request Sebi to cause an inquiry on this transaction and take necessary steps for Raasi to restore the 40 per cent holding in SVCL" the complaint states. The letter comes close on the heels of B V Raju's intention to make an open offer for hiking his stake in SVCL. Raju is being advised by Lazard CreditCapital. Raasi's move reignites the battle between N Srinivasan, India Cements promoter and B V Raju, which seemed to have ended in May.

The letter lays bare the entire episode that took place in December 1997. The nine companies are owned by the Raju family. Each of these nine companies got 4.91 per cent stake in SVCL so that the need for informing the stock exchange did not arise. The sale agreements were entered into in Isnapur (30 kms from Hyderabad), outside the jurisdiction of the Hyderabad Stock Exchange.

India Cement sources argue that since the nine group companies were acting in concert, the takeover code should have been triggered much earlier and not now after almost a year.

Besides, these group companies bought 40 per cent of Sri Vishnu Cements for about Rs.9 crore, thus gaining control of a one-million tonne plant. But a plant with a similar capacity recently changed hands for almost Rs 300 crore.

B VRaju, the chairman of Sri Vishnu Cement, has only now made an open offer to the shareholders for gaining control over it. Already along with his group companies Raju holds a 43.88 per cent stake in the Rs 23.7 crore paid-up equity of Sri Vishnu. The open offer is for a fresh lot of 47.44 lakh shares of Rs 10 each at Rs 25 a share. This constitutes 20 per cent of the company's equity. During the past year, about 98.15 lakh shares have been acquired at between Rs 10 and Rs 17 per share.