The Autoriders group, open bidders for a 20 per cent stake in Saurashtra Cement, has meanwhile approached the Securities & Exchange Board of India (SEBI) for a detailed investigation into the shareholding pattern of the cement company. The predators have said that the confusion on Saurashtra Cement's paid-up share capital was creating serious obstacles for going ahead with its open offer.

In a stake-hike coup which may ultimately deter raiders Autoriders Finance from taking over Saurashtra Cement, the quantum of issued equity of the target company has dramatically expanded from Rs 12 crore to Rs 47.15 crore. According to sources, the promoters have paid up only a very small fraction of the share's issue price, a perfectlylegal manoeuvre, thereby increasing only the issued capital and not the "fully paid-up, issued and subscribed" capital.

A resolution passed at the company's annual general meeting last December had authorised the company to make a preferential allotment of equity at a premium over the face value. Saurashtra Cement has also allotted 5 per cent-plus equity each to Denmark-based cement giant FL Smidth and Industrialisation Fund.

According to a letter issued by the Bombay Stock Exchange to the merchant bankers of the Autoriders group, as on April 6, the equity base of the company stood at Rs 12.0075 crore.

The BSE letter further stated that the total debenture capital of the company stood at Rs 67.55 crore, and the total paid-up capital (the aggregate of the paid-up equity capital and debenture capital) is Rs 79.56 crore.

Saurashtra Cement sources said that every information on capital issues made by the company had been provided to Bombay Stock Exchange officials. When queried on the letter issued toAutoriders by BSE, the sources said there had been subsequent developments by which BSE had been fully informed of the situation.

Meanwhile, in a letter to The Financial Express dated April 8, V Shukla, Saurashtra Cement's corporate director (HRD, quality and communication) responded to an earlier story in the paper on the preferential allotment: "As regards the doubts raised about whether we have informed SEBI and BSE, we again reiterate that Saurashtra Cement Ltd has complied with full and timely disclosure norms and is confident that its actions will stand up to the test of scrutiny by the authorities concerned. All steps taken by Saurashtra Cement as part of its ongoing expansion plans are fully in line with the requirements of the regulatory authorities."

On the question of issue of equity shares to FL Smidth of Denmark and Industrialisation Fund, Shukla says that this was "not a kneejerk reaction to any open offer by anyone," but in fact was "part of our expansion plans developed severalmonths ago." The letter points out, "FL Smidth had applied for and obtained FIPB clearance for investment in Saurashtra Cement several months ago, much before any sign of the recent open offer was on the horizon."