The financial institutions, led by Industrial Development Bank of India, have asked India Cement Ltd to make a presentation on the source of funding for its proposed acquisition of Raasi Cements. According to sources, the company is expected to make a presentation to the FIs on Monday.
The head of an FI, who attended a meeting on the India Cements offer in Mumbai yesterday, said the company should have taken the FIs approval before investing in the equity of another company. He pointed out that all loans advanced by FIs to a company are conditional on the company seeking their approval before investing in other firms.
India Cements hostile bid for a 20 per cent stake in Raasi Cements at Rs 300 a share might be resisted on two critical issues, sources told Business Standard. If the company (India Cement) itself has decided to take over Raasi Cements, the move might be opposed if it is established that the management did not seek prior approval from the lending institutions, specially IDBI, the source said.
However, if Raasi is being taken over by the associate investment companies of India Cement, the FIs cannot have a say in the issue provided the funds of the associate companies do not belong to India Cements, he added.
The other issue cited by the FI chiefs is whether the shares sold by a faction of Raasi Cements promoters fall under the promoters non-disposal undertaking, given by the promoters to the financial institutions.
In case the shares are covered under the non-disposal undertaking, and if the FIs approval has not been taken for the sale, Raasi Cements can refuse to transfer the shares and foil India Cements bid, said the source.
