Jul 23, 2013, 11.33 AM IST | Source: CNBC-TV18

See no threat from Jupiter for Kalindee stake buy: Texmaco

Senior vice president and chief financial officer, AK Vijay told CNBC-TV18 that Kalindee's revival depends on strong technical and financial partner and Texmaco is confident of providing that.

Kalindee's survival and revival depends upon a strong technical and financial partner which Texmaco certainly can provide.

AK Vijay

Senior VP & CFO

Texmaco

Texmaco Rail and Engineering , which is looking to buy 30 percent stake in Kalindee Rail Nirman feels that the open offer price of Rs 68 per share is reasonable for shareholders.

Senior vice president and chief financial officer, AK Vijay told CNBC-TV18 that Kalindee's revival depends on strong technical and financial partner and Texmaco is confident of providing that.

He further said that the company may consider increasing the open offer price if need be, but it is too early to comment on that issue.

Meanwhile, Vijay sees no threat from Jupiter Metal Pvt. Ltd, which also attempted to takeover 30 percent stake in Kalindee Rail by launching a conditional and voluntary open offer.

The rail wagon-maker has bought Kalindee's promoters' 11.74 percent stake .

Below is the edited transcript of Vijay's interview to CNBC-TV18.

Q: Do you think you will be successful in the offer that you are making for Kalindee or do you expect stiff competition from Jupiter?

A: As far as Jupiter is concerned, we do not think there is any threat. If one sees the history of Kalindee, it is basically a rail based company which is totally engaged into the rail engineering and there is a lot of synergy between what Texmaco and Kalindee do.

Their main customer is the same- Indian Railways and we have been dealing with the railways for last six decades. So, we have good experience about how the railway system works, what kind of working Kalindee has and the alignment of Kalindee with Texmaco certainly adds lot of value to the shareholders and that is why we believe that there is no such threat as far as Jupiter is concerned.

Q: Do you have the support of the Kalindee management in doing this? What is the plan over the next couple of months if indeed you are successful with this open offer? Do you plan to merge the two companies or will they continue to exist as separate entities?

A: Kalindee has been doing well over the years, but unfortunately due to the sudden death of the managing director of the company last year, the company was looking into some difficulties on the field of the financial front and they needed some financial support. So, when the Kalindee management approached Texmaco to provide some financial support, Texmaco immediately agreed to that situation. We came forward to the support of Kalindee and accordingly agreed to subscribe through preferential allotment route 24.9 percent share in the enlarged capital.

That is where another company Jupiter tried to get through the hostile open offer. Kalindee's survival and revival depends upon a strong technical and financial partner which Texmaco certainly can provide. The next question regarding how the company plans to do it, that is all matter of future.

I do not know today if we will be merging it or running it as an individual unit or how we plan to do. That certainly depends upon how the situation emerges gradually. Once the shareholder resolutions are passed and the management control is with Texmaco, at that point of time, we will take all those calls.

Q: Would you even be willing to up the open offer price beyond what you have offered if it was required to take your stake up to the desired level?

A: We have offered a very reasonable price at this point of time. The average market price for Kalindee is Rs 65. Our intention is that the value of shareholders should go up and the purpose of Texmaco's induction into this company by Kalindee management is also that the company should add value to its products and that is what they are looking for.

We are looking for a long-term benefit for the shareholders and if the shareholders stick to the company, they are certainly going to be benefited in the long-term, however if the shareholder wants to exit and feel that, this is the value, then we have gone by a reasonable value. Whether there will be increase or no increase is a very difficult question to answer at this point of time. It all depends upon how hostile the other group is.

Texmaco Rail stock price

On April 17, 2014, Texmaco Rail and Engineering closed at Rs 57.55, up Rs 0.20, or 0.35 percent. The 52-week high of the share was Rs 61.90 and the 52-week low was Rs 26.05.


The company's trailing 12-month (TTM) EPS was at Rs 1.61 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 35.75. The latest book value of the company is Rs 31.91 per share. At current value, the price-to-book value of the company is 1.80.

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