The battle for control of Orissa Sponge Iron between Bhushan’s Singhal brothers has intensified further with elder brother Sanjay Singhal initiating talks with foreign institutional investors and with those companies having stake in the Bhubaneshwar-based company for a buyout.
Sanjay Singhal said, “We have made a proposal to Basana Investments, Quantum (M) and Strepera Holdings, who have a combined holding of 15 per cent in Orissa Sponge. The entities have said that they would get back to us.”
According to Orissa Sponge Iron’s shareholding filed with the stock exchanges, Quantum (M) had a 6.31 per cent stake while Strepera Holdings and Basana Investments held five per cent each as of December 2008. Sanjay Singhal-controlled Bhushan Power and Steel made an open offer for Orissa Sponge Iron at Rs 300 a share on February 7, following younger brother Neeraj Singhal’s additional stake acquisition from Unitech promoters. At present, Neeraj Singhal has a 14.8 per cent stake in the company.
Neeraj Singhal said, “We will definitely not tender our shares in the open offer. We will take a call on our next course of action in the next few days.
When asked whether he would make an open offer or had approached the institutions, Neeraj Singhal said, “I would not like to comment now.”
The Orissa Sponge Iron stock was locked at the five per cent upper circuit and the last traded price on the Bombay Stock Exchange (BSE) was Rs 165.10. According to market reports, a block deal happened on the BSE. Neeraj Singhal-managed Bhushal Steel stock gained 16.98 per cent and closed at Rs 332 on the BSE.
Sanjay Singhal’s move to garner shares of Orissa Sponge is aimed at protecting the interest of the existing promoters, who have a little more than 41 per cent stake in the company. If he manages to get the foreign entities on his side, then the majority holding would be with the Sanjay Singhal side, irrespective of the response to the open offer.
In 2007, the Orissa Sponge Iron board had issued equity shares/ warrants on a preferential basis to Quantum, Strepera and Basana, among other institutions and promoter group companies. The family has a history of differences with Sanjay Singhal on one side and younger brother Neeraj Singhal along with father Brij Bhushan Singhal on the other side.