A proxy battle has broken out for control of Gujarat Heavy Chemicals (GHCL), one of India’s oldest chemical companies.
Several high net worth investors have confirmed approaches ahead of a September 12 annual general meeting, which has on the agenda, among other things, the re-appointment of Sanjay Dalmia and Neelabh Dalmia, Anurag Dalmia’s son, as directors.
Anurag and Sanjay Dalmia, sons of founder Vishnu Hari Dalmia, own 22 per cent and 18.5 per cent respectively in GHCL.
Among those to whom approaches were made is Pramod Jain, promoter and director of Delhi-based Pranidhi Ventures, who recently raised his stake in the company from 5.5 per cent on August 14 to 7.5 per cent.
Jain confirmed the approach but declined to name the proxy seeker. “We are only financial investors and hope to offload the equity to strategic investors," he added.
Investors such as Sanmat Jain and Jagdish Purohit, who hold significant stakes in the company, also confirmed approaches but said they were not aware on whose behalf these proxy seekers were working.
Company insiders said that differences between the two brothers have been brewing for some time, principally over management styles. An earlier plan to split the Rs 1,099-crore company was approved by the board but was later shelved.
"The restructuring proposal, which was approved in a board meeting, was subsequently put on hold as Anurag Dalmia was not in favour of it," sources said.
When contacted Sanjay Dalmia said, "My brother and I have the necessary control over the company and have not approached any investors."
On the fact that Anurag Dalmia apparently wants to gain control over the company, he said, "I have no comment to offer. What do you expect from me? You talk to him."
On the issue of restructuring, Sanjay Dalmia said, "We have changed the restructuring proposal as it would have attracted huge stamp duty."
Repeated attempts to reach Anurag Dalmia proved unsuccessful. He did not respond to SMSs sent on his mobile.
In June 2008, margin call on shares pledged to raise funds saw the promoters’ combined stake in GHCL fall to 40.42 per cent from 47.06 per cent. The promoters had to sell part of their stake after GHCL’s share price fell sharply to around Rs 44 in June 2008 from Rs 200 and above in December 2007.
The promoters' stake is slated to fall roughly another 8 percentage points after a foreign currency convertible bond (FCCB) worth $80.5 million, which was issued in 2005, is fully converted. The FCCB can be converted at Rs 159.57 per share any time after September 21 2007.
After the conversion, Anurag Dalmia will own 17.5 per cent and Sanjay Dalmia a little less than 15 per cent.
