Hyderabad: The Bangalore based GMR Group with interests in several infrastructure businesses such as airports, energy and highways has sold its ferro alloys business to the Dubai-based Cronimet Mercon Invest Ltd (CMIL) for Rs22.55 crore.
The promoters of GMR signed a share purchase agreement with Cronimet on Monday to sell almost their entire holding in GMR Ferro Alloys and Industries Ltd (GFAIL). According to the details of this agreement submitted to Indian stock market regulator Securities and Exchange Board of India, or Sebi, the GMR group’s promoters are selling 86.57 lakh shares out of the 87.08 lakh shares they hold in the ferro alloys company. The Dubai entity has agreed to pay Rs26.04 per share to the GMR promoters and will come out with an open offer to the shareholders of GFAIL to acquire 20% holding from them at the same price of Rs26.04 a share in keeping with Indian stock market laws.
GMR Group founder and chairman G.M. Rao (Photo by: K. Sudheer / Mint)
The ferro alloys company was created by GMR Industries Ltd (GMRIL) by spinning off its metallurgical division in April 2006. GFAIL has a high carbon ferro-chrome manufacturing facility located at Tekkali in Srikakulam district of Andhra Pradesh.
“The GMR group encountered some issues in scalability of metallurgical business and could not succeed in acquiring captive chrome mines,” said GFAIL executive director U. Naresh Kumar who added that the business was not one the group wanted to be in. The company had initially been allotted chrome mines in Orissa but this allotment was cancelled after a Supreme Court ruling. “Taking this into account, GMR had demerged the metallurgical division of GMRIL into GFAIL, which is now being acquired by the Dubai company,” said Naresh Kumar.
Shares of GFAIL are in the process of being listed on the same stock exchanges in India on which the shares of GMRIL are listed including the Bombay Stock Exchange and the National Stock Exchange. The Dubai group is going ahead with the acquisition and open offer since the eventual listing of GFAIL is a mere technicality.