Company will carry out an open market sale of shares in several tranches.
Mahindra & Mahindra (M&M), India's largest sports utility vehicle manufacturer, on Thursday said its board has approved the sale of 8.09 per cent stake in its hospitality arm, Mahindra Holidays & Resorts India (MHRIL).
M&M, which currently holds 83.09 per cent of direct equity stake in MHRIL, a listed subsidiary, will carry out an open market sale of shares in several tranches that would be completed before June 2013.
“The first tranche will happen in the near term. This move is primarily to comply with the statutory requirement for listed companies to reach a minimum threshold of 25 public shareholding,” said the Mumbai-based company.
Uday Phadke, president, finance & legal, M&M, said: “We plan to divest a total of 8.09 per cent of MHRIL equity share capital in small lots over the course of the next 16 months through the market. In addition to meeting the statutory requirement this sale will significantly improve the float of MHRIL shares in the market.”
According to existing rules, firms listed on the Indian bourses, with less than 25 per cent public shareholding, should reach the minimum threshold of 25 per cent within a period of three years from the date of commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010 (i.e. 2013).
MHRIL stock closed 4.73 per cent higher at Rs 333.25 on the Bombay Stock Exchange on Thursday, against Rs 318.20 yesterday. M&M’s announcement was made during the trading hours.
