Proxy advisory firm InGovern has raised concerns on the rationale and prudence of investment and open offer made by Triveni Engineering and Industries for Sir Shadi Lal Enterprises (SSLE).

The two sets of promoters Rajat Lal and his family, who are in control of SSLE management, hold about 36 per cent of the shares while Vivek Viswanathan and his family own about 25 per cent.

TEIL is part of a billion-dollar Triveni Group, which is one of the largest integrated sugar manufacturers and has presence in engineering, power transmission, wastewater treatment solutions and defence.

Founded in 1933, Sir Shadi Lal Enterprises has two manufacturing units -- Upper Doab Sugar Mills and Shamli Distillery & Chemical Works in UP’s Shamli district.

Valuation report

TEIL acquired Viswanathan family stake at ₹35 crore and has made an open offer to acquire 25.43 per stake at ₹262.15 per share. However, Shadi Lal on March 27 had shared with BSE Independent Valuation report, conducted by Sundae Capital Advisors which arrived at the “Weighted Average Price” as ₹1,221.70 per share for SSLE.

InGovern report said the other set of promoters, Rajat Lal and family, holding close to 36 per cent of the shares of SSLE are not tendering their shares. The offer price by TEIL is very low compared to the valuation as recommended by the independent directors of SSLE.

On January 30, the date of the open offer announcement, the SSLE shares closed at ₹156.80 at BSE. It reached a peak of ₹383.30 on February 19 and closed at ₹280 per share on April 26.

“Over four times higher valuation price estimated by the independent valuers and recommended by the Independent Directors of SSLE leaves the minority shareholders confused as to the true value of their shareholding as compared to the open offer price,” said the report.

Going forward, in case of any differences between these two sets of shareholders of SSLE, there is a possibility of a potential deadlock – that could prove detrimental to the interest of all stakeholders of SSLE. This may also impact any special resolutions at SSLE in the future, it added.