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PUBLIC ANNOUNCEMENT TO THE SHAREHOLDERS OF THE KIRLAMPUDI SUGAR MILLS LIMITED

 

This Public Announcement is being issued by Ashika Credit Capital Ltd. (hereinafter referred to as "ACCL" or "the Manager to the Offer"), for and on behalf of Sri. C. Raghuram (hereinafter referred to as "the Acquirer") pursuant to Regulation 10 & 12 in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 and subsequent amendments thereto (the “Regulations”).

 

The Offer

 

a.      a.      Sri. C.Raghuram is the Acquirer. There is no Person Acting in Concert (PAC) with the Acquirer for the purpose of the Offer.

 

b.      b.      The Acquirer has entered into a Share Purchase Agreement (“The Agreement”) on February 18, 2002 with M.R. Holdings Ltd (99,000 Equity Shares); Abhyuday Investments Ltd. (99,000 Equity Shares); and Nalanda Consultants Pvt. Ltd. (79,700 Equity Shares) [Promoter Group] (hereinafter collectively referred to as “Vendors”) to acquire in aggregate 2,77,700 Fully Paid-up Equity shares of Rs. 10/- each of The Kirlampudi Sugar Mills Limited ("KSML") representing 69.43% of the Subscribed Share and Voting Capital at a price of Re.1/- per share ("Negotiated Price") payable in cash ("The Acquisition").

 

c.      c.      The Acquirer is now making this Open Offer (the “Offer”) to the Shareholders of KSML (other than the parties to the Agreement) to acquire up to 62,250 [15.56%] fully paid-up equity shares of Rs.10/- each at a price of Rs.2/- per equity share (“Offer Price”) and 1,800 [4.50%] fully paid-up 5 ˝% Income Tax Free Cumulative Preference Shares [voting rights triggered in the year 1977-78] of Rs. 100/- each at a price of Rs.20/- per such Cumulative Preference share (“Offer Price”) aggregating to 20.06% of its Paid up Share and Voting Capital, payable in cash.

 

d.      d.      The Offer is unconditional and not subject to any minimum level of acceptance.

 

e.      e.      The Acquirer has not acquired any shares of KSML in the past. The Equity Shares of KSML are listed at the Hyderabad Stock Exchange Limited (HSE). Based on the information available, the shares of KSML are infrequently traded within the meaning of Regulation 20 (3) of the Regulations. Therefore, while determining the Offer price, in accordance with the Regulations, the following financial parameters of the KSML have been considered for the year ended March 31, 2001: Return on Net Worth - Negative; Book Value per share - Negative; Earnings Per Share – Nil; P/E multiples – Infinite [based on the offer price] and Industry P/E Multiple – 4.10 [Source – Dalal Street, Volume XVII No. 2, Dated January 27, 2002, Industry –Sugar - Integrated]. In view of the aforesaid financial parameters, the offer price is justified in terms of Regulation 20 of the Regulations.

 

f.        f.        The Acquirer does not hold any shares in the KSML as on the date of Public Announcement.

 

g.      g.      This is not a competitive bid.

 

Information about Acquirer

 

  1. Sri.C. Raghuram, S/o.Sri.C.Venkatesan, aged 35 years, Resident of 6-3-649/5, 5th Floor, Chakkilam House, Somajiguda, Hyderabad – 500 082, is a Graduate in Arts, having 10 years of Experience in the field of Construction and its related activities. He is the Managing Director of Chakkilam Estates Ltd. and Chakkilam Trade House Limited. His Net worth as on 31.01.2002 as certified by Mr. R. Krishna Thulasi Kumar (Membership No:205241) Chartered Accountant, having office at 114, Ameer Estate, 7-1-621/A, Sanjeeva Reddy Nagar, Hyderabad – 500038 vide certificate dated on 15.02.2002 is Rs. 269.12 lacs.

 

  1. The Acquirer has promoted unlisted companies in the related activities, the particulars of which are given as under: -

 

    1. a.      Chakkilam Estates Ltd., originally incorporated as Pvt. Ltd. Company on 25.02.1999, under the Companies Act, 1956, is engaged in the construction activities. The office is located at 6-3-649/5, Chakkilam House, Behind Maheswari Chambers, Rajbhavan Road, Somajiguda, Hyderabad - 500082. As per the Audited Accounts for the year-ended 31.03.2001, the Total Revenue and Net Profit of the company were Rs.540.37 lacs and Rs. 22.19 lacs respectively.

 

    1. Chakkilam Trade House Ltd., incorporated on 15/01/2001 under the Companies Act, 1956, is engaged in the marketing of products such as Credit Cards, Home Loans etc. and providing integrated travel services. Presently, the office of the company is located at 6-3-649/5, 3rd Floor, Chakkilam House, Behind Maheswari Chambers, Rajbhavan Road, Somajiguda, Hyderabad – 500082. As the company has not yet completed its first year of accounting period Profits and Loss a/c of the company is not yet drawn up.

 

Information about the Target Company

 

  1. KSML was incorporated on 14.08.1944 under the Indian Companies Act, 1913. The Registered Office of the Company is situated at 8-2-626/8, Road No.1, Banjara Hills, Hyderabad – 500034.

 

  1. The Authorized Share Capital of KSML is Rs 15.00 Crores consisting of 7,500 - 5˝ %Income Tax Free Cumulative Preference Shares of Rs. 100/- each and 1,49,25,000 - Equity Shares of Rs. 10/- each. The Issued, Subscribed and Paid-up Share Capital is Rs. 40.00 lacs comprising of 6,000 - 5˝% Income Tax Free Cumulative Preference Shares of Rs.100/- each and 3,40,000 - Equity Shares of Rs. 10/- each. There are no partly paid-up shares.

 

  1. KSML was engaged in the business of manufacturing of Sugar and Rectified Spirit. The company is under Lockout since 22.01.2000.

 

  1. The Shares of KSML are listed at the Hyderabad Stock Exchange Limited (HSE).  

 

  1. As per Audited Accounts for the year-ended 31.03.2001, KSML earned Gross Revenue of Rs. 0.81 lac, thereby incurring Net Loss of Rs. 10.21 lacs.

 

Reasons for the Acquisition and Offer

 

  1. The Acquirer had entered into the Share Purchase Agreement with the objective of Substantial acquisition of shares and voting rights accompanied with change in control/ management and is making the Open Offer pursuant to the Regulation 10 & 12 of the Regulations.

 

  1. The Acquirer proposes to set up the Sugar plant with 2500 TPD capacity and re-start the distillery unit of KSML with few modifications, overhauling and stabilizing the equipments and simultaneously expand its capacity. The Acquirer also proposes to implement the power cogeneration plant with bagasse as input so as to generate 10 MW power to be used partly for captive consumption and partly for sale to Grid. The Acquirer do not propose to dispose off or otherwise encumber any of the assets of KSML in the next 2 years, except in the ordinary course of business.

 

  1. Although the line of activities mentioned above are different than those in which the Acquirer is engaged at present, but for a person with business acumen nothing is difficult so long as the venture is viable. The Acquirer is confident to turn the company into profits.

 

Statutory Approvals/ Other Approvals required for the Offer

 

               a.                            a.             The Acquirer will make the requisite application to the Reserve Bank of India ("RBI") to obtain permission under the Foreign Exchange Management Act, 1999 ("FEMA") and subsequent amendments there to for acquiring shares from the Non Resident/NRI/FII/OCB shareholders of KSML.

 

               b.                            b.             The Acquirer does not require any other statutory approvals for the purpose of the Offer.

 

               c.                            c.             In case of non-receipt of statutory approvals within time, SEBI has a power to grant extension of time to acquirer for payment of consideration to the shareholders, who have accepted the Offer, subject to Acquirer agreeing to pay interest as directed by SEBI under Regulation 22(12) of the Regulations.

 

De-listing option to the Acquirer

 

In case the public share holding falls to 10% or less, after the Offer, the Acquirer in compliance with Regulation 21 (3) of the Regulations, will seek to comply with the listing requirement by disinvestments through an offer for sale and/or by making a fresh issue of capital to the public which shall open within a period of 6 months from the date of closure of this Offer.

 

Financial Arrangements 

 

  1. The Acquirer has made firm arrangements for the implementation of the offer in full from their own internal/domestic sources. R. Krishna Thulasi Kumar (Membership No:205241) Chartered Accountant, having office at 114, Ameer Estate, 7-1-621/A, Sanjeeva Reddy Nagar, Hyderabad – 500038 has certified that sufficient resources are available with the Acquirer for fulfilling the obligations under this "Offer" in full.

 

  1. The Acquirer has opened an Escrow Account in the Lord Krishna Bank Ltd. TSR Towers, Somajiguda, Hyderabad-500082 and made a deposit in the account an amount of Rs.40,500/- (Rupees Forty Thousand Five hundred Only) being more than 25% of the total consideration payable of Rs.1,60,500/-.

 

  1. The Manager to the Offer has been solely authorised by the Acquirer to realise the value of Escrow Account in terms of the Regulations.

 

  1. The Manager to the Offer, Ashika Credit Capital Limited confirms that the firm arrangement for the funds and money for payment through verifiable means are in place to fulfill the offer obligations.

 

Other terms of the Offer 

 

a.      a.      The Letter of Offer together with the Form of Acceptance cum Acknowledgement will be mailed to all those shareholders of KSML (other than the parties to the agreement) whose names appear on the Register of Members of KSML at the close of business hours on 22.02.2002 (the "Specified Date").

 

b.      b.      Persons who are shareholders of KSML but are not registered or who have sent their shares for transfer or shareholders who have not received the Letter of Offer and who wish to accept the offer should send their application in writing on plain paper with the following information:                       

Name & Address of the first holder, Name(s) & address(s) of joint holders(s) if any, Regd. Folio No., Share Certificate No., Distinctive Nos., No of Shares offered. The said application should be sent to Registrar to the Offer. Alternatively, shareholders who have not received the Letter of Offer & Form of Acceptance may obtain a copy of the same (on providing suitable documentary evidence like folio number, share certificate number, distinctive numbers etc.) from Registrar to the Offer.

 

c.      c.      All owners of shares, registered or unregistered (who own the shares any time prior to the closure of the Offer), are eligible to participate in the offer. Unregistered shareholders / owners of shares who have sent shares for transfer should send to the Registrar to the Offer the following documents as applicable to them along with the acceptance cum Acknowledgement:                                                                                                                              (a) Original share certificate(s), (b) Original broker contract note, (c) Valid share transfer form(s) as received from the market.                                                                                                                   No indemnity is required from unregistered shareholders.

 

d.      d.      Shareholders who wish to accept the offer and tender their Equity Shares, will be required to send their (i) duly signed Form of Acceptance, (ii) original share certificate(s), (iii) duly signed and executed transfer deed(s) and other documents to the Registrar to the Offer, in accordance with the instructions specified in the Letter of Offer and on the Form of Acceptance.

 

e.      e.      In case the number of shares validly tendered in the Offer by the shareholders of KSML are more than the shares to be acquired in this Offer, then the Acquirer will accept shares on a proportionate basis subject to a minimum of 50 Shares, or the entire holding if less than 50 shares from each shareholder accepting this Offer, as per the provisions of the Regulations. The rejected applications/documents will be sent by Regd. Post.

 

f.        f.        The payment for the acquisition of the shares will be made by the Acquirer in cash through a crossed Demand Draft/Pay order to the equity shareholders of KSML whose equity share certificates and other documents are found in order and accepted, within 15 days from the date of closure of the Offer.

 

g.      g.      The Acquirer undertakes to pay interest Pursuant to Regulation 22 (12) to the shareholders for the delay, if any, in payment of consideration.

 

h.      h.      Attention of the shareholders is invited to the fact that the Letter of Offer along with the form of Acceptance would also be available on the SEBI web site at www.sebi.gov.in and eligible persons may download the Form of Acceptance cum Acknowledgement from the website for applying in the offer.

 

i.         i.         The schedule of the activities pertaining to the Offer are given below: -

 

Activities

Date (Day)

Specified date

22.02.2002 (Friday)

Last Date for a Competitive Bid

15.03.2002 (Friday)

Letter Of Offer to be posted to shareholders

30.03.2002 (Saturday)

Date of Opening of the Offer

04.04.2002 (Thursday)

Date of Closing of the Offer

03.05.2002 (Friday)

Last date for revising the Offer price/ number of shares 

22.04.2002 (Monday)

Date of communicating rejection/ acceptance and payment of consideration for applications accepted

18.05.2002 (Saturday)

 

General

 

a.      a.      Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public announcement / Letter of Offer, cannot withdraw the same.

 

b.      b.      (i) The Acquirer can revise the Price upwards up to 22.04.2002 and revision, if any, in the Offer price would appear in the same newspapers where this Public Announcement appeared and the same price would be paid to all shareholders who tender their shares in the Offer.

 

     (ii) If there is Competitive Bid:

 

·         ·         The public offers under all the subsisting bids shall close on the same date.

·         ·         As the offer price cannot be revised during 7 working days prior to the closing date of the offers/ bids, it would, therefore, be in the interest of the shareholders to wait till the commencement of that period to know the final offer price of each bid and tender their acceptance accordingly.

 

c.      c.      Neither the Acquirer nor Vendors and/or KSML has been prohibited by SEBI from dealing in securities, in terms of direction issued u/s 11B of SEBI Act.

 

d.      d.      Attention of the shareholders is invited to the fact that this Public Announcement will also be available on the SEBI website at www.sebi.gov.in

 

e.      e.      Pursuant to Regulation 13 of the Takeover Regulations, the Acquirer has appointed Ashika Credit Capital Limited, Hyderabad, a Category 1 Merchant Banker, as Manager to the Offer.

 

 

f.        f.        the obligations of Acquirer laid down in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 and subsequent amendments thereof.

 

 

Issued by Manager to the Offer on behalf of the Acquirer

 

Ashika Credit Capital Ltd.

[Contact Person: Mr.Rajendra Kanoongo]

408, Taramandal Complex

Near Secretariat, Saifabad

Hyderabad-500 004.

Tel: 040- 6617802 / 03

Fax: 040-6617801

E-Mail: ashika_hyderabad@rediffmail.com

 

Place: Hyderabad

Date: 20.02.2002.