Financial Daily from THE HINDU group of publications
Thursday, Feb 21, 2002
Madhusudan cancels EGM -- 51 pc stake sale to Duravit hangs fire
AHMEDABAD, Feb. 20
MADHUSUDAN Oils & Fats Ltd (MOFL), owners of the Cera brand sanitaryware, has withdrawn the notice to its shareholders for the extraordinary general meeting (EGM) scheduled on February 26.
The EGM was to ratify the company's decision to offload 51 per cent stake in the company to Duravit AG of Germany.
The indefinite postponement of the EGM puts a question mark over the immediate future of the DM18.62-million (Rs 40 crore) deal that would have ceded management control of Cera to the Honberg-based company.
However, the Madhusudan management is convinced that the Duravit transaction is very much on and it is a matter of time before wrinkles in the deal are ironed out.
The decision to scrap the EGM is the direct fallout of a plaint to the Securities and Exchange Board of India (SEBI) by the Investors' Grievances Forum (IGF) that the EGM be stopped.
The IGF had alleged that MOFL had short-circuited the regular procedure whereby the company would have been required to make an open offer to pick up the mandatory 20 per cent from the public.
Mr Vikram Somani and associates, the promoters of the company, hold 58.38 per cent stake while 36.3 per cent is held by the public and others and FIs hold 5.32 per cent.
Following the sale of equity to Duravit, the holding of the promoters would have been scaled down to 25.15 per cent, that of the public to 20.8 per cent just as the diminished holding of the FIs would have stood at 3.05 per cent.
The EGM was expected to merely `ratify' the decision, approved by MOFL's board of directors in January, to cede management control to Duravit.
The deal included a preferential allotment of shares worth 14.5 per cent stake to the German company, followed by a rights issue, taking up Duravit AG's stake in the company to 51 per cent.
The change of brass at MOFL is now likely to take a while, thus putting a spoke in Duravit's plans to enhance its production capacity through the one million-piece-per-annum facility in Ahmedabad.
For MOFL, a company with negligible activity, till a Gujarat High Court order of October 30, 2001 allowed the demerger of the group's sanitaryware business of the flagship in its favour, it will have to wait a while before the German management takes over.
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