Triveni Engineering may have to exit or pay more for Sir Shadi Lal Enterprises: InGovern

Triveni Engineering & Industries Ltd (TEIL) may have to pay up more for acquiring a controlling stake in Sir Shadi Lal Enterprises (SSLE) than its current open offer, or exit its investment, as transaction at the current price remains unlikely, proxy advisory firm InGovern said in a report on Sunday.

Triveni Engineering had made an open offer of ₹262.15 per share for acquiring a controlling stake in SSLE in January. However, the SSLE scrip, which closed at ₹156.8 on the BSE on the day the open offer was announced, has since nearly doubled to open at ₹292 on the BSE on Monday. The share had hit a peak of ₹383.3 in February.

This, after independent valuers appointed by SSLE’s board valued the company at ₹1221.7 per share. They ascribed a value of ₹800 crore to the company’s landholdings.

The publicly traded company is worth ₹154 crore as per its latest share price on the BSE.

“Given the significant discrepancy between the open offer price of ₹262.15 by TEIL and the valuation per share estimated by the independent valuers of ₹1221.70 per share being four times higher, the offer price seems very low and unfair,” InGovern noted in its report.

“TEIL may have to sell its stake to another buyer and exit or pay a higher price to buy the share from minority shareholders,” the report further noted.

Triveni Engineering did not immediately respond to Mint’s queries.

The open offer by Triveni Engineering was triggered after it acquired a 25.43% stake in SSLE from one set of its promoters for about ₹35 crore. Two sets of promoters jointly owned about 61% of the SSLE’s shares.

The remaining promoters led by managing director Rajat Lal hold about 36% of the shares. These promoters are not tendering their shares in the open offer, InGovern said.

“Consolidation of accounts of SSLE with TEIL is unlikely to materialize,” the proxy advisory firm noted.

“Going forward, in case of any differences between these two sets of shareholders of SSLE, there is a possibility of a potential deadlock – that could prove detrimental to the interest of all stakeholders of SSLE. This may also impact any special resolutions at SSLE in the future,” it further noted.

Triveni Engineering is a leading integrated sugar and alcohol producer in the state of Uttar Pradesh. It also has business interests in water management solutions, power transmission gear manufacturing and in defence.

The company’s shares opened at ₹365.7 on the BSE on Monday, having gained around 7% since the beginning of the year. Its market capitalisation is just over ₹8,000 crore.

Sir Shadi Lal Enterprises is engaged in sugar and alcohol manufacturing and has two manufacturing units in Shamli, Uttar Pradesh.