Harish co seeks stay on DCM Shriram warrants

BHASIN VERSUS DCM - II

A battle for control is brewing in Delhi-based sugar-to-industrial fibres company DCM Shriram, with HB Stockholdings, a prominent city brokerage and shareholder, filing a petition before the Company Law Board (CLB), seeking a stay on the resolution passed by DCM Shriram Board to allot its promoters preferential warrants.

HB Stockholdings, promoted by Harish C Bhasin, recently made DCM Shriram shareholders a cash offer to buy 22.8 per cent, which will increase its stake to 35.65 per cent.

But the warrant issue will raise the promoter stake by an estimated 10 per cent after it is converted, taking total promoter shareholding to 42.54 per cent.

"The promoters' move to allot warrants to themselves could impact the interests of small shareholders. Therefore, we have filed a petition with the CLB," said a source close to HB Stockholdings.

The CLB hearing is expected to take place tomorrow.

The CLB episode could be the beginning of another intense battle between DCM Shriram and Bhasin.

Bhasin and the DCM family had first clashed over shareholding in 1983. Bhasin fought a losing battle to acquire a controlling stake in DCM Ltd.

DCM Shriram was one of the companies formed after DCM Ltd was restructured in 1990.

In October, the DCM Shriram board passed a resolution allowing promoters to allot 7,00,000 warrants to themselves.

Each warrant is to be converted into three shares at different points of time over the next 18 months.

Sources close to DCM Shriram said the sole purpose for the warrants is to raise working capital.

But HB Stockholdings contended that the company had already arranged a capital requirement of Rs 38 crore following an annual general meeting in September.

"If there is a working capital requirement, it can be arranged by means other than the issue of warrants," the source said.

DCM Shriram produces sugar, alcohol, organic chemicals and industrial fibres. HB Stockholdings has made a cash offer to acquire 22.88 per cent from the shareholders of DCM Shriram at Rs 70 per share. The company already holds 12.77 per cent in the company.

The promoters, who include Chairman and Managing Director Tilak Dhar, hold 32.54 per cent. Dhar was not available for comment.

HB Stockholdings has stated that it has no plans to make any change in DCM Shriram's businesses and the offer is being made to consolidate shareholding without any change in control.