Dhoots to up Videocon stake

MUMBAI, April 9: Fearing a takeover threat, the Dhoot family, promoters of Videocon International Ltd, has decided to make an open offer to ...

MUMBAI, April 9: Fearing a takeover threat, the Dhoot family, promoters of Videocon International Ltd, has decided to make an open offer to buy two per cent in the consumer electronics firm. The Dhoots currently own 35 per cent of the company while their associates hold another seven per cent.

quot;The Dhoot family is making an open offer to acquire a two per cent stake, ie about 14 lakh shares, at a price of Rs 140 per share, more than than twice the current market price of Videocon International8217;s shares,quot; Videocon chairman V N Dhoot said, adding, quot;We want to consolidate our equity in the company.quot; Dhoot, however, denied that the promoters are fearing any takeover threat.

The Dhoots are being advised by the international merchant banker, Jardine Fleming for the acquisition and the offer will open as soon as the SEBI gives its green signal to the offer document.

The Dhoots plan to make further acquisitions of two per cent each year until they have a controlling 51 per cent stake, he said. quot;We believe thatthe current market price does not reflect the intrinsic value of the company,quot; he added. The book value of Videocon International is Rs 180.

He said the two per cent offer is being made to reach small shareholders instead of buying stake from the stock market. He said as the two per cent open offer will not trigger the SEBI8217;s takeover code, hence, they need not to make an offer for 20 per cent stake. quot;Besides, the promoters are also not having enough resources to acquire 20 per cent in one go,quot; he added. Though Dhoot claims that he took the decision to make the open offer only on Wednesday, the company8217;s scrip was going up from the last one month. A Japanese fund was active in the scrip and the scrip shot up from Rs 40 to Rs 62 in the last few days. The BSE had to put a margin circuit breaker to control the rise.

The total acquisition cost of around Rs 19.6 crore would be funded though Shree Dhoot Trading amp; Agencies Ltd, a family-owned investment company. The offer price was arrived at after a valuationwas made by the statutory auditors, Khandelwal amp; Company. quot;This step meets our twin objectives of enhancing shareholder value and good corporate governance,quot; Dhoot said. However, a corporate source said Videocon might be pre-empting a takeover move by a foreign firm. Even if any other company is making a counter-offer, it will have to be at a price higher than Rs 140 and the offer should be for a minimum 20 per cent.

Videocon shares closed 10.04 per cent, or Rs 5.70, higher at Rs 62.45 on the NSE on Thursday. The BSE was closed on Thursday.

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Videocon International is the flagship of the Rs 2,500 crore Videocon group. The company8217;s turnover as on March 1997 was Rs 1,615 crore while its gross profit was Rs 88.40 crore. The company expects to end the fiscal 1998 with a net profit of about Rs 120 crore on a turnover of Rs 2,000 crore.

It makes a wide range of consumer electronics and appliances like colour and Bamp;W televisions, audio systems, washing machines, air conditioners and refrigerators.