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The aquisition of Sterling Computers--the holding company of Sterling Cellular, the Delhi cellular licensee--by the Ruias of the Essar group has taken another controversial turn with promoter of the company Sivasankaran refusing to resign from the board of directors.
Sivasankaran's refusal to step down comes in wake of default of payment of Rs 80 crore by the Ruias. The payment was to have been the last instalment of a total of Rs 383.20 crore which the Ruias had agreed to pay for control of the company.
Refusing to be comment on the controversy, Sivasankaran told the Business Standard from Chennai, "I have not resigned from the board (of directors). If there exists any letter saying that I have resigned, it is a foregery." Two cheques of Rs 40 crore each given by Ruias had bounced earlier this year. The money for the aquisition was to have been paid by May 31, failing which the ownership of Sterling Computers was to be returned to Sivasankaran, according to the shareholder agreement between the two sides. Essar executives then denied this development and also disputed the exact amount owed to Sivasankaran.
According to Essar executives, only Rs 36 crore remained of the Rs 382.20 crore remained to be paid to Sivasankaran, "Even this we expect to pay in the next week or so," a senior group executive had said in early June.
The Ruias acquired Sterling Computers through the take-over of three Sivasankaran-promoted investment companies -- Karthik Software, Saravana Exports and Shanmuga Consultants -- which held 80 per cent in Sterling Computers. The Rs 382.20-crore tab included payment for 51 per cent equity in Sterling Cellular and 60 per cent equity in Aircell Digilink, the cellular licensee in Uttar Pradesh (east), Haryana and Rajasthan. The Delhi deal was estimated at Rs 232.20 crore and the Aircell-Digilink transaction at Rs 150 crore.
The latest Ruia-Sivasankaran stand-off comes close to reports that the Securities and Exchange Board of India (Sebi) is likely to probe an open offer that the Essar group made for 20 per cent equity of Sterling Computers held by the public.
The Bombay Stock Exchange is to ask Sebi to probe the offer next week after the Essar group requested a delisting of the Sterling scrip from the bourse after it mopped up seven per cent from the market.
The public holding, thus, reduced to less than the mandatory 20 per cent required for a public listing.
Essar executives had claimed in May that they were able to pick up 17 per cent in the open offer, thereby vesting the ownership of 97 per cent equity in Sterling Computers with the Ruias.
They intend to offload up to 49 per cent (amounting to 4.8 million shares) for $175 million, according to an American depository receipt clearance it received from the government.
