NEW DELHI, February 4: For Kanthal India Ltd (KIL) shareholders it could be a bonanza from the Swedish-based promoter Kanthal AB. The foreign promoter is making an open offer to KIL's shareholders for picking up 8.33 lakh equity shares at an attractive price of Rs 32 (around 45 per cent premium to the current market price).Buoyed by this public offer, Kanthal India counter has shot into the limelight on the Mumbai Stock Exchange (BSE) with the scrip zooming by almost 14 per cent to Rs 22.1 on February 4. Volumes, too, saw a spurt to 4256 shares against an average volume of only 200-600 shares changing hands in the previous few trading sessions. In fact, the scrip started rising from a level of Rs 19.4 on February 3 and the promoters made a public announcement on February 4. The foreign firm's offer to buy back Kanthal India shares was originally at a premium of 65 per cent to the market price prevailing on February 3.
The public offer is for raising the KAB's stake from the current 51.54 per cent to 74per cent in Kanthal India. At present, public hold 35.85 per cent of the total paid up capital of Rs 3.69 crore in KIL. The balance is held by institutions and non-resident Indians. The offer opened on February 4 and closes May 30.
The public notice issued by Industrial Investment Trust Ltd (the manager to the offer) is in compliance with the SEBI's takeover code brought into effect in 1997. The open offer is subject to the clearance by SEBI and also by the Reserve Bank of India.
KAB has made firm arrangements for financing the offer for Rs 3 crore with Skandinaviska Enskilda Banken, Sweden. This apart, the promoter has also created an escrow account of Rs 75 lakh (25 per cent of the total consideration) with The British Bank of Middle East, Mumbai.
KAB is hiking its stake in order to introduce its proprietary technology and know-how to KIL. This will enable the foreign promoter to have full control over its Indian subsidiary. Also this will pave way for strengthening KIL's operations, improve theproduct quality and diversify its product range.
KIL is engaged in the manufacture of electrical resistance wires, ribbons and strips and thermostatic bimetal strips of various grades. KIL had come out with a Rs 3.09 crore rights issue in June, 1996 at a price of Rs 25. For the first-half of the current fiscal, the company recorded a 40 per cent growth in profit after tax (PAT) to Rs 21 lakh on a marginal sales growth of 2.69 per cent to Rs 5.72 crore.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
