The Hindu Business Line : SEBI clears Jindal group co plan to pick SISCOL stake

THE Securities and Exchange Board of India (SEBI) has cleared the proposal by a Jindal group company to acquire Lakshmi Machine Works' 39.71 per cent stake in the ailing Southern Iron and Steel Company Ltd (SISCOL).

The SEBI has, however, said the acquisition is subject to a special resolution being passed by the shareholders in a general meeting, for which postal ballot facility could be used.

The proposed transaction should be completed within 90 days from the date of the order (November 5).

Vrindavan Services Pvt Ltd (VSPL), part of the Jindal group that runs Jindal Vijaynagar Steel and Jindal Iron and Steel Co Ltd, has proposed to acquire LMW's stake of 3 crore shares in SISCOL, constituting 39.71 per cent of the equity capital, at a price of Re 1 per share.

SISCOL's share price in the BSE closed on Tuesday at Rs 15.05 with about 62,000 shares being traded.

The SEBI chief, Mr G.N. Bajpai, in his order, stated that he was granting exemption to Vrindavan Services (P) Ltd from complying with the provisions of Regulation 10 and 12 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 with regard to the proposed acquisition of 3 crore equity shares of SISCOL from LMW, a co-promoter of the project, subject to a special resolution being passed by the shareholders in the general meeting.

The target company shall make use of the facility for voting through postal ballot, he said.

The SEBI Chairman ruled that the acquirer should complete the proposed transaction within 90 days from the date of the order.

An LMW source, speaking to Business Line here today, said the company felt that it would not be in a position to invest its share of about Rs 120 crore in the expansion scheme which is expected to cost about Rs 400 crore.

He considered the sale as a good option for the LMW.

Asked about the pricing of the share at Re 1 when the market price of the scrip was around Rs 15, he said while the market valuation of the stock could be different, the company felt that there was no `intrinsic value' in the stock in view of the fact that the net worth of the company has been fully eroded as on June 30, 2004.

LMW also wanted to focus on its own core business of textile machinery manufacture.

While LMW's stake in SISCOL was 39.71 per cent, TIDCO had a 10.93 per cent share and public shareholding was to the extent of 49.36 per cent.

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