Kolkata: In the run-up to the sale of 42% stake in Tide Water Oil Co. (India) Ltd by state-owned insurers and Andrew Yule and Co. Ltd, a Kolkata-based businessman has bought 14% of its shares from the market.
Mahendra Kumar Jalan said in a recent declaration to Tide Water that his stake in the lubricant maker was 14.01%. But it “might actually be 21%”, according to Kallol Datta, chairman and managing director of government-owned equipment maker Andrew Yule, which promoted Tide Water and owns 27.71% of its shares.
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The Union government has decided that along with Andrew Yule, Life Insurance Corp. of India Ltd and United India Insurance Co. Ltd will sell their combined 14.3% stake in Tide Water. SBI Capital Markets Ltd is advising Andrew Yule on the sale, which Datta expects to be completed in two months.
“If we go by his (Jalan’s) own declarations, his holding currently is 14%, but there are other firms that hold shares in Tide Water and some of them could be indirectly owned by him,” Datta told Mint.
Jalan denied having raised his stake above 15%. “My stake in Tide Water is around 14%,” he said. “Yes, I want to take over the company, and will bid for the shares to be sold by the government,” he added.
Under India’s takeover code, any investor acquiring 15% or more of a listed company must make an open offer for another 20% at a minimum of the past six weeks average share price.
According to Tide Water’s latest filings with the stock markets, Madanlal Ltd, in which Jalan is a director, owns 10.15% of its shares. A host of other Kolkata-based investment firms such as Arion Commercial Pvt. Ltd, Santosh Industries Ltd, Blue Chip Vanijya Pvt. Ltd and Maryada Barter Pvt. Ltd hold between 2.68% and 4.79% each.
Besides Jalan, another lubricant manufacturer, Standard Greases (Silvassa) Pvt. Ltd, recently acquired 12.22% stake in Tide Water. Standard Greases, India’s biggest manufacturer of industrial and automotive greases, bought shares held by Four Star Oil and Gas Co., a firm owned by Chevron Corp., according to a Tide Water official, who did not want to be named as he is not authorized to speak to the media.
Andrew Yule’s Datta confirmed Four Star had pared its stake in Tide Water from 22.12% to 4.95% in December. “It isn’t a big thing for us because we didn’t have any partnership with Chevron. Four Star’s stake in Tide Water was a legacy asset that came into its (Chevron’s) hands through a series of mergers and acquisition,” he said. The management of Standard Greases was not available for comment.
Jalan expects Standard Greases to bid for the government’s 42% stake in Tide Water. “They could be one of our key contenders,” he said.
India’s Board for Industrial and Financial Reconstruction has approved a revival package for Andrew Yule. The company has been posting successive losses since 2000-01, and till 2006-07, it accumulated losses of over Rs325 crore. The package entails selling its stakes in three companies it promoted—Tide Water, Dishergarh Power Supply Co. Ltd and Phoenix Yule Ltd.
Asked why these companies were being sold at a time when valuations were likely to be depressed, Datta said: “We could have got a better deal if we could wait for a year, but couldn’t because the (Union) cabinet has cleared the sale, and wants its decision to be carried out immediately.”
Tide Water’s revenues and net profit in the nine months to December was Rs408.86 crore and Rs19.86 crore, respectively.
Graphics by Ahmed Raza Khan / Mint