The board of directors of Wheels India Ltd., a TVS Group company, has cleared a proposal to raise Rs.100 crore through a public issue, subject to the approval of shareholders.
The company will be revisiting the capital market after 37 years. It first went public in 1975.
Addressing a press conference here on Friday, Srivats Ram, Managing Director of Wheels India, said the funds thus raised would be used to meet the annual capital needs, working capital requirements, and also to beef up the debt-equity ratio. “The Rs.100 crore will go a long way towards helping the company fund this in an equitable manner that will help sustainable growth,” he said.
The proposed public issue would also help the company conform to SEBI (Securities and Exchange Board of India) guidelines on public holding in listed companies. SEBI has made it clear that all listed entities must have a minimum public share holding of 25 per cent by June next.
“The company intends to continue to be listed in the stock market,’’ he asserted. The board meeting was attended by representatives of all the promoter groups, he added. The open offer in the wake of change in the ownership pattern of Titan Europe, which held 35.91 per cent stake in Wheels India, also figured in the discussion at the board meeting, he said.
Open offer
Following a share-swap process, Titan Europe has become a 100 per cent subsidiary of Titan Luxembourg S.a.r.l., which itself is a wholly-owned subsidiary of Titan International, Inc. As per SEBI guidelines, any change in the ownership pattern of any of the major promoters calls for an open offer.
In line with this, Titan has announced an open offer to buy Wheels India shares at Rs.725.39 per share of the face value of Rs.10 each. Since this announcement on Thursday, the share price has gone up on the bourses.
“Titan has made it very clear in the board meeting that the only reason they are doing the open offer is because the Indian statutory regulation requires them to do so,’’ Mr. Srivats Ram said. “They are happy with the working relationship they have had with us, and they are hoping that this relationship will continue into the future,” he added.
“The company is being managed and controlled by the TVS Group, and this will continue to be so in the foreseeable future. There is going to be no change per se.
Structure
“Post the public issue, the structure of the company is likely to be similar to what it is now. We are not looking at any significant change in terms of how the company operates. We will have a very similar shareholding pattern,” he said.
Asserting that Titan Europe had had a very good relationship for almost 15 years with the Indian promoters, he said the TVS Group controlled and managed Wheels India.
“It will continue to do so post these events. I don’t think the promoters’ shareholding will be materially different,” he added.
To a question, he said, “we have not decided on the route of the public issue”. “Being in the public domain” would give Wheels India access to capital that the company might need as it continued to grow, he said.
“I do think Wheels India has gained by certain amount of market discipline that comes with being a listed company,” he added. To a specific query, he pointed out that many a public shareholder had remained with the company for a long time.
