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Balrampur Chini's plan to buy Indo Gulf hits roadblock

Harish Damodaran

HC to hear case again on Sept 29

New Delhi , Sept. 14

Balrampur Chini Mills' proposed takeover of Indo Gulf Industries Ltd, which owns a sick 3,000-tcd mill in Bihar, has been put on hold by the Delhi High Court.

This follows a petition filed by Integral Finvest Private Ltd (IFPL), claiming that it had already signed a memorandum of understanding (MoU) with Indo Gulf's promoter, Dr S.K. Garg, to acquire controlling stake in the company.

This had happened prior to Balrampur Chini coming out with an open offer for acquisition of 38.83 per cent of Indo Gulf's share capital, for which the public announcement was made on August 24.

The dispute between IFPL and Dr Garg has since been referred to an Arbitration Tribunal, even as the High Court, in an order issued on September 6, has asked Indo Gulf and its promoter to "maintain status quo till the next date of hearing with respect to their shareholding".

The matter is listed for hearing again on September 29.

When contacted by Business Line, the Managing Director of Balrampur Chini, Mr Vivek Saraogi, said, "Our merchant bankers (Enam Financial Consultants) and lawyers are looking into the issue and we will take the necessary steps." He refused to elaborate further.

Status quo on shares

One interpretation though is that the High Court order only mandates status quo with regard to transfer of shares and does not explicitly bar the open offer process.

In any case, the shares and monies payable are to be placed in an Escrow account till the open offer's completion.

The offer opens on October 16 and closes on November 6 — well after the next date of hearing.

The Delhi High Court's order comes on top of an earlier Supreme Court order restraining Balrampur Chini from undertaking any crushing at its upcoming factories at Rudrapur-Guleria and Kumbi in Uttar Pradesh. This was in response to a petition by Ojus Industries Private Ltd, stating that the two plants were within 15 km of the mills for which it had already filed Industrial Entrepreneurs Memoranda.

The existing policy stipulates a minimum 15 km radial distance between two factories.

"The Court has only stopped milling activity and not construction. It has allowed construction to continue, so long as it is at our own risk and no equity is claimed. We have filed an affidavit with the Court that we have already invested about Rs 100 crore in these two new units," Mr Saraogi added.

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