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      Home Back   
     

    PUBLIC ANNOUNCEMENT TO THE EQUITY SHAREHOLDERS OF

    M/S THE KADRI MILLS (CBE) LIMITED

    (This is in continuation to the public announcement made on 19.11.2001 on this newspaper)

     

    This revised public announcement is being issued in compliance with the directions of SEBI vide its letter dated 09.07.2003 and also in compliance with the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as �SEBI (SAST) Regulations, 1997� or �Regulations�) by Indbank Merchant Banking Services Ltd, Manager to the Offer, for and on behalf of Mr G Kannappan, Mr K Gov Ramaswamy and Mr G Vijayakumar, who accept full responsibility for the information contained in this announcement.

     

    ACQUISITION OF EQUITY SHARES IN THE CAPITAL OF M/S THE KADRI MILLS (CBE) LTD AND OFFER TO SHAREHOLDERS

     

    The Offer

     

    1.      The Kadri Mills (Cbe) Ltd (hereinafter referred to as �target company�) having its registered office at Trichy Road, Ondipudur, Coimbatore 641 016, has a paid-up equity share capital of Rs 278 lakhs divided into 27,80,000 equity shares of Rs.10/- each as on date. There are no partly paid-up shares.

     

          2.  Mr G Kannappan, acting for himself, and for and on behalf of Mr K Gov Ramaswamy and Mr G Vijayakumar as Agent (hereinafter referred to as �the acquirers�), has entered into agreements for acquisition of shares (hereinafter referred to as the �Agreements�) with Mr D Ramakrishnan and Mr V Palaniswamy (hereinafter referred to as the �Sellers�) to acquire 65,135 shares in the capital of target company representing 2.34% of its issued and paid-up capital.

     

    3.      Pursuant to the said agreements and in order to comply with SEBI (SAST) Regulations, 1997, the acquirers hereby intend to make an unconditional offer to all the shareholders of target company (other than the parties to the said agreements for acquisition of shares) to acquire from them upto 6,33,134 shares in the capital of target company representing 22.77% of its issued and paid-up capital (hereinafter referred to as the �Offer�) at a price of Rs.30.17 (offer price being Rs.26.00 and the interest amount being Rs.4.17), as against Rs.5.50 per share originally offered.

     

    4.      The offer is not subject to a minimum level of acceptance from the shareholders.

     

    Offer Price

     

    5.      The original Offer price of Rs.5.50 per share was determined as per the provisions of Regulation 20(2) of SEBI (SAST) Regulations, 1997 [prior to the amendments dt. 09.9.2002]. However, consequent upon the submission of draft letter of offer, SEBI vide its letter dated 12.10.2001 directed the acquirers to justify the offer price as per Reg. 20(3) [prior to the amendments dt. 09.9.2002]. The acquirers submitted their justification vide their letter dated 24.10.2001, which was not accepted by SEBI. After a series of correspondence between the acquirers and SEBI on the pricing issue, the matter was finally referred to the Chairman of the Board for his disposal. The Chairman vide his order no. CO/463/TO/01/2003 dated 18.01.2003 directed the acquirers to revise the offer price to confirm to the provisions of Reg.20(3) read with Reg.20(6) [prior to the amendments dt. 09.9.2002]. Accordingly, the acquirers have arrived at the offer price at Rs. 26.00 per share and submitted the revised letter of offer to SEBI on 11.6.2003. SEBI vide its letter dated 09.7.2003 directed the acquirers to proceed with the offer at a price of Rs.26.00 per share along with interest @10% for the delayed period. The actual consideration of Rs.30.17 payable per share includes the interest component of Rs.4.17 per share. In the view of revision in the pricing, the offer was delayed for about 19 months.

     

    JUSTIFICATION OF OFFER PRICE

    The provision of Regulation 20(3) of SEBI (SAST) Regulations [prior to the amendments to the regulations dt. 09.9.2002] provides the following pattern for pricing the offer price:

    (a)

    The negotiated price under the agreements under Reg.14(1)

    Rs. 5.45 per share

    (b)

    The highest price paid by the acquirers or persons acting in concert with them for any acquisitions, including by way of allotment in a public/rights/preferential issue, if any, during the 26 week period, prior to the date of Public Announcement.

     Not Applicable

    (c)

    Other parameters (as on March 31, 2001)

     

     

          Return on Net Worth (%)

    1.41

     

     Book value per share (Rs.)

    86.04

     

     Earning per share (Rs.)

    1.21

     

    Price to Earnings Multiple based on the Offer    Price

    21.5x

     

    Industry P/E Ratio (Source: Dalal Street Journal, Vol:XVI No.24, Dated Nov.19 � Dec.2, 2001)

    2.5

     

    In view of the vide variance prevailing in the market price compared to the book value, the offer price has been determined on the basis of the Supreme Court decision in the matter of Hindustan Lever Employees� Union Vs. Hindustan Lever Limited, (1995) 83 Com. Case 30, wherein the Hon�ble Court opined that the fair value for a listed company could be assessed based on the following weightage:

    Market based Value:   2,  Earnings based Value:   2,   Net Asset Value:   1

     

                Based on the above, the value assessed is as follows:

     

                                                                                                    (Amount in Rs.)

     

    As on 31.3.2001

    Market based value (as per latest quotations)

    5.41

    Earnings based value

    14.25

    Net Asset value

    86.04

    Fair value per share

    25.07

     

    Hence, the offer price of Rs.26/- is justified in terms of regulations and the acquirers are paying an interest of Rs 4.17, @ 10% for the delay in the payment of consideration from the last date of payment of consideration as per original schedule to the actual date of payment.

     

    Salient features of the Agreements for Acquisition of Shares

     

    6.      The agreements dated 14.11.2001, inter-alia, provide for sale of 65,135 fully paid up equity shares constituting 2.34% of the issued, subscribed and paid up share capital of the targeted company at Rs.5.45 per share aggregating Rs.3,54,985.75.

     

    7.      The agreements shall ipso facto be terminated upon non-compliance by the parties with the requirements of the open offer under the SEBI (SAST) Regulations, 1997.

     

    8.      The offer is scheduled as under:

                         Activity

         Original

     Revised

    Date of Public Announcement

    19.11.2001 (Mon)

    19.7.2003 (Sat)

    Specified Date

    30.11.2001 (Fri)

    30.11.2001 (Fri)

    Date of dispatch of Letter of Offer

    31.12.2001(Mon)

    01.8.2003 (Fri)

    Date of Opening of Offer

    04.01.2002 (Fri)

    07.8.2003 (Thu)

    Last Date for withdrawal of acceptance

            --

    01.9.2003 (Mon)

    Date of Closing of Offer

    02.02.2002 (Sat)

    05.9.2003 (Fri)

    Last date for revising the Offer Price

    24.01.2002 (Thu)

    27.8.2003 (Wed)

    Last date for a competitive bid

                   No competitive bid received

    Date by which acceptance/rejection would be intimated and the corresponding payment for the acquired shares and/or the share certificate for the rejected shares will be dispatched.

    12.02.2002 (Tue)

    19.9.2003 (Fri)

     

    9.      The shareholders of the target company, who wish to avail of and accept this offer, are required to send the form of acceptance and authority and transfer deed(s) duly signed and executed along with original share certificate(s) and other necessary documents as detailed in the letter of offer either through hand delivery or by registered post to      Manager to the Offer, M/s Indbank Merchant Banking Services Ltd, 205-A, II Floor, Raheja Centre, 1073, Avinashi Road, Coimbatore 641018, in the form and manner specified in the Letter of Offer clearly marking on the envelope �Open Offer for Kadri Shares� so as to reach on or before the closure of the Offer.

     

    10.   All eligible shareholders, in case of non-receipt of the Letter of Offer may send their acceptance on a plain paper stating the name, address, folio number, number of shares held, distinctive numbers, number of shares offered along with the original share certificate(s) and duly signed and executed transfer deed(s) to the Manager to the Offer, so as to reach on or before the closure of the Offer.

    11.  Persons who own the shares of the target company, but whose names do not appear in the Register of Members on the specified date, may also participate in the offer by submitting a written application to the Manager to the Offer [details of which will be set out in the Letter of Offer, a copy of which can be obtained from the Manager to the Offer] together with the relevant share certificate(s), transfer deed(s) and the original contract note issued by a registered share broker of a recognized stock exchange through whom such equity shares were acquired. The Letter of Offer can also be accessed from SEBI�s web site www.sebi.gov.in during the offer period.

     

    12.  In the case of non-acceptance/rejection of Offer, share certificate(s), transfer deed(s), and other documents of such Offer will be returned by registered post to the shareholders or unregistered owners, as the case may be, at their sole risk.

     

    The acquirers

     

    13.  Mr G Kannappan, Mr K Gov Ramaswamy and Mr G Vijayakumar, sons of late K Govindaswamy Naidu, residing at No.126, Arts College Road, Coimbatore 641 018, are The acquirers.

     

    Mr Kannappan is the Chairman and Managing Director of the target company. He is also the Chairman and Managing Director of M/s Sharadha Terry Products Ltd (STPL) and a Director of M/s Sri Kannapiran Mills Ltd (SKML).

     

    Mr Ramaswamy is the Managing Director of the target company and a Director of STPL and SKML.

     

    Mr Vijayakumar, Vice Chairman and Managing Director of target company, is also Director of STPL and SKML.

     

    STPL and SKML are listed companies. Further the acquirers, target company, STPL and SKML belong to KG Group of Companies, Coimbatore.

     

    Present Holding of The acquirers

     

    14.  The acquirers, along with the persons acting in concert, hold 20,81,731 shares in the      capital of the target company, representing 74.88% of the total capital. The acquirers have not acquired any shares in the market in last 12 months prior to the original public announcement dated 19.11.2001 and subsequently thereafter.

     

    Future Plan

     

    15.  The acquirers intend to run the company as a going concern and do not intend to dispose off or encumber any assets of the target company in the next 2 years from the date of closure of offer, except in the ordinary course of business or as permissible under the Regulations.

     

    The Target Company

     

    16.  The Kadri Mills (Cbe) Limited, is a public limited company incorporated on 09.7.1946 under the Indian Companies Act, 1913. The main objective of the company is to carry on the business of cotton yarn spinning and trading. The company changed hands and came into the fold of acquirers� group on 25.10.1975 with accumulated loss and negative net worth. The acquirers� group with its tireless efforts revived the company and made it a viable unit. Due to the prolonged recession in textile industry the performance of the company has come down in the recent years.

     

    Reason for the Acquisition

     

    17.  The acquirers intend to consolidate their holding in the target company with a view to carry on the business of the company in a more beneficial manner.  Further consolidation of the holding of the acquirers is expected to boost the morale of the present management.

     

    Funding arrangement of the Offer

     

    18.  The acquirers have made firm arrangements for payment of consideration to the shareholders of target company whose shares are acquired pursuant to this offer. The total requirement of funds for the acquisition of 6,33,134 shares at a price of Rs.30.17 (offer price being Rs.26.00 and interest amount being Rs.4.17) per share would amount to Rs.1,91,01,653. M/s Gopalaiyar & Subramanian, Chartered Accountants, Coimbatore have furnished a certificate dated 11.3.2003 stating that the acquirers have sufficient resources to complete the offer in accordance with the Regulations.

     

    19.  The acquirers have opened an Escrow Account, in the name and style as  `A/c G Kannappan � Escrow � Open Offer� with Indian Bank, Stock Exchange Branch, Coimbatore 641 005 and deposited an aggregate amount of Rs.47,75,415 representing 25% of the total consideration payable under this offer. A lien in favour of the Manager to the Offer has been marked in the Escrow Account as per the Regulations.

     

    Statutory Approvals and Conditions of Acquisition of the Offer

     

    20.  To the best of the Acquirer�s knowledge as on the date of Public Announcement, there are no approvals required under the Companies Act, 1956 MRTP Act, 1969, and any other applicable laws.

     

    21.  There are no approvals required from any of the banks or financial institutions.

    Delisting Option

     

    22.  In the event of acceptance of the offer resulting in the public shareholding being reduced to 10% or less of the voting capital of the target company, the acquirers will then make another offer at the same offer price within a period of three months from the date of closure of this offer as provided under Regulation 21(3) of SEBI (SAST) Regulations, 1997.

     

    General

     

     
     


    23.  Pursuant to the Regulations, the acquirers have appointed M/s Indbank Merchant Banking Services Ltd as Manager to the Offer.

     

    Issued by Manager to the Offer

     

     

    M/s Indbank Merchant Banking Services Ltd

     

    205-A, II Floor, Raheja Centre, 1073, Avinashi Road, Coimbatore 641018

    Ph: (0422) 2217056, Fax (0422) 2217057

    email: indbank@md3.vsnl.net.in

     

     

    On behalf of the acquirers

     

    Mr G Kannappan, Mr K Gov Ramaswamy, and Mr G Vijayakumar                  

    126, Arts College Road, Coimbatore 641 018

    Phone (0422) 2214261 Fax: 2214430

     

     

    Coimbatore

    18.7.2003

     

     


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