The Hindu Business Line : Electrolux Kelvinator mulls delisting

IS Electrolux Kelvinator Ltd (EKL), the Indian arm of Swedish white goods major AB Electrolux, preparing to delist from the Indian bourses? Though the company and its parent have not made an official announcement, the market is abuzz with rumours that the company is likely to delist and that AB Electrolux is likely to make an open offer.

The company informed the BSE on Wednesday that at its AGM held on Tuesday, the members approved delisting of securities from all stock exchanges, besides giving their nod to increase the authorised share capital of the company to Rs 1,000 crore from Rs 650 crore.

In fact, an upward movement in the company's stock price has been noticed. The stock price went up by 3.20 per cent to Rs 9.02 on the BSE on Wednesday. Trading volume also increased to 1.02 lakh shares compared to 88,521 on Tuesday. The volume in the EKL counter has increased substantially over the last couple of days. The average trading volume in June is around 20,000 shares.

Commenting on the decision (delisting of securities), an EKL official said, "On the advice of our merchant bankers we have taken this decision. It is not that we are going to delist tomorrow. Any decision on this would be as per the SEBI directive."

The official said, "Post the recently concluded rights issue of Rs 199.7 crore, if the market regulator wants the company to make an open offer or delist, then the company would require AGM approval. In order to avoid calling for a special AGM, it was decided to avail ourselves of the shareholders' nod at the meeting held on Tuesday."

Sources close to the Indian promoters, who are now in the minority, told Business Line, "The Indian promoters had opposed this at the annual general meeting."

It may be recalled that to ensure adequate capitalisation, AB Electrolux had declared its intention to subscribe to shares beyond its entitlement if other shareholders do not exercise their rights entitlement in the said letter of offer. It had also been disclosed in the said letter of offer that AB Electrolux would buy out the remaining shareholders at the rights issue price in accordance with the SEBI (Delisting of Securities) Guidelines, 2003.

After the subscription of the rights issue, the parent (AB Electrolux) stake has increased from 75.96 per cent to 87.9 per cent. However, as per the SEBI delisting guidelines, only if holding increases beyond 90 per cent can a company go for delisting. The Indian promoters, public and financial institutions together hold about 12 per cent. At present, the equity shares of the company are listed on the stock exchanges of Mumbai, Delhi, Jaipur, Bangalore, Kolkata and Ahmedabad.

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