HSE probe into Raasi deal

The Raasi official had confirmed the transfer of the 42-45 per cent of SVC shares held by RCL to different individuals and stated that "it is a legitimate transfer". According to him, the RCL board had met twice on the disinvestment of the shares during September and December, 1997, and had taken a decision in favour of selling the shares to individuals and corporates. The board is represented by three directors from IDBI, IFC and GIC.

Interestingly,HSE officials have yet to confirm the receipt of the board-meeting notice and the decision thereof. The official said, "We might have received the notice as part of the listing agreement." As part of the revival package, the BIFR had insisted that RCL invest in SVC. Later, the same investment got converted into equity which increased the RCL stake in SVC to 45 per cent, the official said. The source said that since SVC is under the BIFR-fold, the RCL board need not obtain its shareholders’ approval. However, it needs approval from financial institutions and the BIFR to carry out the decision. The company had done the same before the disinvestment, the official said.

Earlier, reacting to the issue, the ICL management had said that their main target is RCL and not SVC. However, they said that the responsibility of finding out whether the transfer of some of the holdings to other group companies, is within the purview of law or no rests with Sebi.

Meanwhile, it is learnt that Sebi is looking into thedecision of Raasi Cements to transfer its stake in Sri Vishnu Cements into another group company. Sebi feels that this move might have violated its takeover code. The regulator is expected to send an official communication to the company soon.

Section 23 (1) of SEBI’s takeover code clearly forbids a target company to carry out certain actions during the offer period, unless it obtains the approval of shareholers after the date of public announcement of the open offer.

For instance, the company is not allowed to "sell, transfer, emcumber or otherwise dispose of or enter into agreement for sale, transfer encumbrance or for disposal of assets otherwise, not being sale or disposal of assets in the ordinary course of business, of the company or its subsidiaries". This section also prohibits it from issuing any "authorised but missued securities carrying voting rights", as also from entering, into any materials contracts".

Investment bankers say that Raasi’s `poison pill’ transaction may provecounter-productive. The validity and legality of the transaction is under doubt, bankers said, as Vishnu Cements is a BIFR case and hence cannot be sold till a revival package is put in place. When contacted, officials at Raasi said that chairman B V Raju was travelling and therefore unavailable for comment.

Sri Vishnu Cement has a capacity of 0.8 million tonnes, which together with Raasi’s 1.6 million tonnes, give ICL an additional capacity of 2.4 million tonnes. Taking over Raasi’s therefore, will automatically lead to the acquisition of Sri Vishnu. But the transfer of stake to another entity ensures that ICL ends up with a capacity only 1.6 million tonnes.