Takeover Woes

many industrial houses take over well-run companies which pay good dividends to share holders. But after these companies are taken over, their share prices start falling. No dividend is paid and there is no question of their issuing bonus shares. The companies start making losses and the shareholders are made to suffer.

To quote two examples: The RPG group took over Stone India Ltd. At that time, the price was being quoted at Rs 60 per share. But after the takeover, no dividend has been paid and share prices have fallen to Rs 8.00. The RPG group also took over SAE India Ltd when its shares were ruling at over Rs 200. But the price has now dipped to only Rs 39.

 

The B M Khaitan group is another such example. It was controlling Williamson Magor Ltd. Only two years earlier, the share was quoted above Rs 250. But after the tea gardens were sold to some of their other companies, the share price fell below Rs 50 per share. The group purchased Union Carbide Ltd and renamed it Eveready Batteries Ltd. It purchased the Carbide shares at Rs 171 per share. But the price today is below Rs 100. Why is this happening? The government has proclaimed time and again that it seeks to protect the interests of small shareholders. I would like to know what steps have been taken against these managements.