TVS group company Wheels India announced plans to raise Rs 100 crore through a public issue. This is to primarily meet the SEBI mandate of a minimum 25 per cent public shareholding, which all listed companies must comply with by next year.
This comes a day after its foreign promoter Titan Europe announced an open offer to buy 14.38 per cent stake in Wheels India for Rs 103 crore.
As Titan Europe already holds a 35.91 per cent stake in Wheels India, there is a theoretical possibility of it becoming the majority shareholder if the open offer receives full response. However, Srivats Ram, Managing Director, Wheels India, clarified that he does not see this happening and is confident of the TVS group retaining control of the company.
Currently, the Indian promoters (T.V. Sundram Iyengar & Sons Ltd, Sundaram Finance Ltd and southern Roadways Ltd) hold 49.7 per cent stake in the company.
“We believe we will be the largest shareholder. Regardless of all that, TVS will continue to control and manage. We will continue to be a listed entity.”
Ruling out any hostile takeover by Titan International, Ram said the foreign promoter was very happy with its relationship with Wheels India, which completes 50 years of operations.
Triggered by SEBI rule
This open offer was triggered by SEBI rules which require such an offer when there is any change in ownership pattern of a promoter, said Ram. Titan International had recently increased stake in Titan Europe.
The fresh issue of equity shares to raise Rs 100 crore, approved at a Board meeting on Friday, could result in a dilution of 5 per cent. It could be in the form of a QIP (qualified institutional placement), IPP (institutional placement programme) or other modes. The funds will go towards working capital and improving debt equity ratio, said Ram. Wheels India’s debt is at Rs 400 crore.
Wheels India hopes to conclude the process before the SEBI deadline of June 4, 2013, for maintaining a 25 per cent public float. “By the end of this, we expect Indian promoter shareholding pattern to be similar to what it is now,” said Ram.
The company share reached a new high on the BSE on Friday, increasing 20 per cent to close at Rs 888.10.