Asahi to increase stake in Floatglass India to 75%

ACC, Tatas to divest combined stake of 26 per cent

Our Corporate Bureau

Mumbai, April 16: ASAHI Glass Co Ltd, a co-promoter and single largest stakeholder of Floatglass India, has decided to increase its stake in the company from 49 per cent to 75 per cent.

According to a press release, it has entered into an agreement to acquire the entire equity and preference share holding of its joint venture (JV) partners — ACC, Tata Engineering and Tata International — who are divesting a combined stake of 26 per cent in Floatglass India. The deal is worth about Rs 28 crore. Asahi has been advised by Andersen Corporate Finance for this deal.

Indications are that Floatglass India may look at another round of financial restructuring or even examine the option of roping in a strategic partner.

This follows the decision of the three JV partners to concentrate on their core business.

Pursuant to this acquisition, Asahi plans to review the existing operations of Floatglass India and evaluate measures to improve its performance and financial viability.

Earlier, Floatglass India had been able to avoid being declared a sick company under the Sick Industrial Companies (Special Provisions) Act by the Board for Financial and Industrial Reconstruction (BIFR) following the decision of Asahi Glass to pump in fresh foreign capital of Rs 19 crore.

Asahi had invested Rs 19 crore in Floatglass India through the subscription of cumulative preference shares of Rs 100 each carrying a dividend of 10 per cent redeemable in the year 2009. Prior to this, the company had raised around Rs 40 crore from preference shares issued in April 1999 to retire high cost debt.

While the Tatas hold 15 per cent, ACC has a shareholding of 13 per cent in the company. Asahi, which at present holds 49 per cent, will increase its stake by buying out the the preference shares held by the co-promoters.

ACC which was instrumental in getting the Tatas into the JV with Asahi got out of the business last year so as to focus on its core business of cement.

Similarly, the Tatas who hold their stake through Tata Sons, also decided the same following their internal restructuring and the decision to concentrate on core businesses.