Government-owned Andrew Yule is likely to come up with a follow-on public offer (FPO), dropping its plan of selling 26.33% stake in Tide Water Oil. Chairman Kallol Datta told FE that since the company has repaid the entire government loan of Rs 62.26 crore by selling its stake in DPSC and Phoenix Yule, it does not require selling its stake in Tide Water.
?We would hardly get Rs 100 crore by selling our stake in Tide Water. We would better go for an FPO to raise this amount than selling our stake in Tide Water, which is doing very good business under our management control,? Datta said.
However, the board of director, he said, was yet to take a decision on dropping Tide Water Oil divestment and go for an FPO.
According to a BIFR recommendation, Andrew Yule should sell stakes in Phoenix Yule, DPSC and Tide Water Oil to repay government loans and get rid of non-performing businesses. But after the selling stake in DPSC and Phoenix Yule, the company garnered enough funds to repay government loans. Tide Water is not a non-performing asset.
Tide Water, currently the highest revenue earner for Andrew Yule, posted a profit before tax (PBT) of Rs 85 crore on gross sales of Rs 750 crore in 2009-2010 against a PBT of Rs 45.78 crore on gross sales of Rs 610.48 crore in 2008-09. Datta said while sales jumped by 145% over a period of four years, PBT went up by 750% during the same period. ?So why should we sell stake in a company, which is doing well under our management control,? Datta added.
He said after the board and the heavy industries ministry agree to drop the plan of stake sale in Tide Water, the company would start discussions on a possible FPO. Tide Water Oil, originally a joint venture company formed 60 years ago between Caltex and Andrew Yule, currently has a promoters holding (Andrew Yule) of 26.33%, bank and financial institutions? holding of 14.31%, non-promoter corporate bodies? holding of 40.93% and public?s 18.43%.