MUMBAI, February 6: The Rs 486-crore Atul Ltd has divested close to 3 per cent of its total 7.5 per cent stake in Swiss multinational Novartis, in an attempt to retire high-cost debt. A special negotiated deal of nine lakh shares at a premium of 5.7 per cent was brokered by Birla Marlin on the Bombay Stock Exchange (BSE).The deal was struck at a price of Rs 345 per share (including a commission of Re 1) translating into an inflow of Rs 31 crore for the Atul group. The buyer is understood to be Ind Ocean Fund. No official confirmation on this was, however, available.
The Ahmedabad-based Atul group holds about 25,00,000 equity shares in Novartis and a significant holding in demerged specialty chemicals entity Ciba Specialty Chemicals Ltd.
Sources said that Atul had offered its holding to the Swiss life-sciences giant since it had the first right of refusal. In response to a query early last week, a Novartis India spokesperson had said that the group had no plans to increase its equity holding in itsIndian affiliates.
Novartis AG already holds a 51 per cent equity in the Indian subsidiary and any further increase in its holding would have needed the clearance of the Foreign Investment Promotion Board (FIPB).
Atul managing director Sunil S Lalbhai, in a press release, stated: "Atul Ltd is presently restructuring its debts and the present divestment is one of the few major initiatives identified by the company to reduce its interest burden. The financial leverage of the company increased significantly after its acquisition of the erstwhile Atic Industries in end-1995 primarily through borrowings which will now get corrected."
He added in the communique that at the end of the restructuring exercise, currently undertaken by Atul Ltd, there would be a steep reduction in interest cost and a significant improvement in the bottomline of the company. Simultaneously, on the operations front, the company has embarked on several key initiatives like revision in product mix to enable high-value products,self-sufficiency in power to reduce cost, a special thrust on exports to penetrate new markets and revamping of distribution channels in the international markets. These efforts, he added, would help the company offer better returns to its shareholders.
The Novartis scrip, which opened the day at Rs 318, moved up to touch an intra-day's high of Rs 325 but closed lower at Rs 320.25, registering a fall of Rs 4.75 over Thursday's close.
It is unclear whether the Lalbhais of the Atul group would divest their entire holding both in Novartis and Ciba Specialty, though sources maintained that the balance shares may not be sold at all.
The Atul group is a major player in the dyestuffs, bulk chemicals and intermediates, aromatics, agrochemicals and pharmaceuticals business. The divestment comes even as Atul and Ciba are in the process of parting ways in their 38-year old epoxy resins joint venture, Cibatul. Atul plans to buy out Ciba's stake in the venture.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
