GACL buys loss-making DLF Cement for Rs 140 cr

GACL buys loss-making DLF Cement for Rs 140 cr
ENS ECONOMIC BUREAU

MUMBAI, DEC 14: Gujarat Ambuja Cement has acquired loss-making DLF Cement at a total consideration of Rs 140 crore. GACL will be making public offer to the shareholders of DLF for acquisition upto 4.26 crore equity shares, representing 20 per cent of the equity capital of DLF at a price of Rs 13.85 per share. The public offer is expected to be executed within a month, subject to the SEBI approvals.

GACL has already purchased 2,00,00,000 fully paid up equity shares of the DLF promoters which comes to a price of Rs 12.65 per share through preferential allotment basis yesterday while another 4.53 crore fully paid up equity shares representing 21 per cent of the equity capital was acquired today at the same price.

Delhi-based DLF Cement has debt of Rs 350 crore and accumulated loss of Rs 140 crore. Post-takeover, equity of DLF cement will increase to Rs 316.64 crore. Incidentally, DLF was holding talks with French transnational Lafarge cement for transfer of stakes, but somehow the talks broke down, and Gujarat Ambuja Cement, having major presence in western India, grabbed the opportunity.

Addressing a news conference, GACL managing director N S Sekhsaria said that the agreement to acquire the stake in DLF Cement would provide strategic advantages to the company to spread its marketing network in Northern India due to the location of the DLF plant. He informed that his company would infuse Rs 200 crore into the newly acquired DLF Cements partly for financial restructuring and expansion of plant capacity. As on March 31, 1999, DLF Cements has posted a loss of Rs 122 crore on the balance sheet and cash loss of Rs 70 crore. It has a total loan liabilities of Rs 397 crore from the financial institutions.

Reacting to the announcement, DLF scrip spurted in the Calcutta Stock Exchange to be traded at as high as Rs 18 against the previous day's closing prices of Rs 16 and finally closed at Rs 17.90. On the BSE, it closed at Rs 17.30. While Gujarat Ambuja Cement scrip movement was more or less stable and the acquisition, as it appeared now, had no impact on its price movement. The counter closed at Rs 656 after touching an intra-day high of Rs 675 against the previous closing of Rs 641.

Analysts question the need for dilution - almost 100 per cent prior to making an open offer. It is clear that whenever GACL merges DLF with itself, it will be able to do a share swap and the ratio will result in very marginal dilution of Ambuja's equity. The financial year has been extended and latest debt figures are not available.

Lax disclosure norms worry SEs
MUMBAI: Inadequate disclosure standards of companies have started worrying stock exchanges. The BSE has asked companies to disclose upfront any `price sensitive' information to the bourse including details of mergers and acquisitions, de-mergers, restructuring, collaborations and orders received. According to a market source, several companies have kept the stock exchanges in the dark about major restructuring proposals. ``As a result, insider trading is rampant before announcing major deals. Price-sensitive information has been leaked out in several cases while keeping investors in the dark,'' said a broker.