Rough road ahead

The huge chunk of shares that were owned by Harshad Mehta in Apollo Tyres is apparently sizable enough to become a nightmare for Omkar Kanwa...

The huge chunk of shares that were owned by Harshad Mehta in Apollo Tyres is apparently sizable enough to become a nightmare for Omkar Kanwar. There is no doubt that 15 per cent of shares in a company as profitable as Apollo, is going to be an attractive opportunity for several players in the business.

While the Singh-Kanwar family currently has a comfortable with 37 per cent holding, anybody new with 15 per cent under their best could easily make life difficult. What’s worse, is the fact that once a new buyer has 15 per cent, he is entitled to make an open public offer that will allow him to mop up another 20 per cent.

For the moment, Kanwar is sitting pretty. But what is giving him sleepless nights at the moment are indications that domestic tyre majors as well as global players may be interested in buying Apollo shares.

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Setting aside Rs 70 crore for acquiring this block, is something that Kanwar can easily afford but had hardly planned for in the current year. If the bidding gets really serious for this lot of shares then of course the estimated (at today’s rates) of Rs 70 crore as the outlay could be much higher.

The promoters are unlikely to treat this matter casually since in recent times several other tycoons have suddenly found themselves endangered by the fact that predatory competitors have decided to buy significant chunks of their company. Watching the plight of some of these firms to pay a significant premium to ensure that they retain complete control of their fiefdoms. Let’s see how high the Kanwar are willing to go.

Minda Joint Venture

The 250 crore Minda Group, manufacturers of auto switches, horns, lamps and locks is among the smart companies expanding their business through JVs. The company is investing Rs 32 crore in the 80-20 JV with TYC of Taiwan. TYC’s product range consists of head lamps, mirrors, condensers, radiators and fan sets. TYC’s current exports comprise a serious, 6.5 per cent of Taiwan’s total auto component export figures which is itself a huge global industry.

MD Nirmal K. Minda sees this strategic alliance as a privileged access to the resources of TYC, which will result in a cut down in his development time and cost of products. Although the company does not plan to set up any additional manufacturing facilities, the existing ones will all be upgraded. The company is also looking at export possibilities as TYC currently exports to over 80 countries.

Suri’s not interested

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Lalit Suri’s Bharat Hotels has opted out of being one of the contenders in the final bidding for the state-run Great Eastern Hotel in Kolkata. Suri found out in the nick of time that the hotel was riddled with huge liabilities. Not that there are no other bidders as the three other parties from whom bids were received by are unknown relatively entities.

However, Suri’s backing out has come as a huge blow to the West Bengal government. Taking into consideration the reputation that Bharat Hotels has of successfully bidding for hotels it is no wonder that the government was so keen to hand over the Great Eastern to Suri as none of the others have any experience of running any big and brand recognisable hotels. As was expected the savvy Suri of Bharat Hotels was not commenting on why he decided to back out.

Dilip Cherian, runs a public affairs firm Perfect Relations. He is an economy watcher and tycoon tracker. None of the people he writes about are his clients. Your insider tales are welcome at dilipcheriannow-india.net.in