The Hindu Business Line : Beeyu Overseas facing takeover threat?

WITH increasing volume of shares being traded in the Bombay Stock Exchange (BSE) in recent times, there are conflicting claims about hostile interest in the stock of city-based tea manufacturer Beeyu Overseas Ltd.

Mr S.K. Khetan, a high net worth individual, says he now holds roughly three per cent of Beeyu's equity, and is planning a voluntary open offer for an additional 33 per cent. The move to acquire the additional stake, if successful, will bring him on par with Mr B.P. Singh, Chairman of the company, who personally holds approximately 34 per cent shares in the company.

Mr Khetan has claimed that he has secured commitments from a few other large investors who together hold another 15 per cent of Beeyu's equity. The latter, he said, have agreed to support the move. In case he can rustle up their support, the group will be able to control 51 per cent of the outstanding shares.

But Mr Singh has, however, claimed that he and his associates collectively control 55 per cent of the paid-up capital.

Mr Singh said: "An open offer can be made only after garnering 15 per cent. Prior to that, they are supposed to inform the stock exchange once a holding crosses 5 per cent. Nothing of the sort has happened so far. I am sure there is no real threat".

Beeyu, a Rs 37-crore turnover company, had earlier this year made a follow-on public issue of 70 lakh shares of Rs 10 each at a premium of Rs 4 per share. Its current equity stands at Rs 14 crore. The Beeyu stock trades on the BSE at about Rs 25. Roughly 55 lakh shares have been traded in the first nine days of the current month compared to a little over one crore shares during the whole of last month.

The company, Mr Khetan said, is set to become a large single-location tea manufacturer with the completion of its expansion programme. It has also worked out an agreement with Tata Coffee Ltd to jointly set up an ambitious project. Beeyu has further sought to establish a presence in Sri Lanka.

"The company has paid dividends continuously for over 10 years. It is also a recognised export house for tea and coffee", he said, while referring to what he called "the company's true worth".

Mr Singh in turn cited the same reasons. "We have consistently rewarded our shareholders. Why would they want a change in management?," he asked, adding that a new player will not be in a position to bring quality leadership to the company".

Mr Khetan claimed that the current enterprise value of the company is approximately Rs 50 crore against a market capitalisation of Rs 35 crore or so. This makes it an attractive investment proposition. He has also declared that he is opposed to the company's plan to de-list its stock from the Calcutta Stock Exchange.

Beeyu has proposed to move a special resolution - at its AGM later this month - to delist from three regional bourses in Kolkata, Kochi and Coimbatore.

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