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Business News/ Companies / No intention to hike stake in IVRCL: Essel
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No intention to hike stake in IVRCL: Essel

No intention to hike stake in IVRCL: Essel

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Hyderabad: Subhash Chandra-led Essel Group said on Monday that it at present has no intention to increase its stake further in Hyderabad-based infrastructure company IVRCL Ltd.

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“At present, there is no intent of Essel to increase stake in the company by way of an open offer or through the open market," Essel said in a statement.

Essel may, however, oppose IVRCL’s plans to raise 400 crore through the sale of land and stakes in some projects to invest in projects under execution. “It will critically evaluate the announcement made by the management in the media about its intent of selling some prime assets of the company, which may cause further deterioration in the overall asset base of the company, in which case Essel will weigh all available options, including initiating relevant proceedings and other ways of protecting its interest," the statement said.

Reddy, chairman of IVRCL, and R. Balarami Reddy, chief financial officer, did not respond to calls and messages.

Sudhir Reddy has indicated that he will resist any attempts at a hostile takeover.

Shares of IVRCL declined 2.61% to 70.80 on BSE, while the Sensex rose by 0.33% to close at 17,150.95 points.

Essel said it has decided to maintain its current holding until general shareholder consensus or other considerations persuade it to intervene in the management of IVRCL for increasing shareholder value.

In the quarter ended 31 December, IVRCL reported a profit of 6.8 crore and revenue of 1,195.5 crore. The company has an order book of 25,000 crore, of which it has been able to secure projects worth 10,677 crore. IVRCL’s gross debt stands at 2,500 crore.

“Essel might wait for IVRCL stock to cool off a bit before it starts buying once again," said Shailesh Kanani, research analyst at Mumbai-based brokerage Violet Arch Securities Pvt. Ltd.

IVRCL has gained 18% since 28 March when Essel said it had acquired 10.19% of the company, while the benchmark Sensex has gained 0.4% in the same period.

“IVRCL desperately needs capital to invest," Kanani said. “Since most of the institutional investors are long-term investors, they will support IVRCL management efforts to raise equity."

viswanath.p@livemint.com

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Published: 16 Apr 2012, 11:08 PM IST
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