Escorts says no truth in hostile takeover rumours

Escorts Group, which makes agriculture-machinery, construction and material handling equipment among other products, has said there is no truth in rumours that some of its rivals are planning a hostile takeover of the company.

CNBC-TV18 had reported on Thursday that the company could face a hostile takeover threat and its promoters have increased their stake by 5% in last 2-3 weeks in a bid to prevent it. A news paper report also said that the market was abuzz with news that Mahindra & Mahindra was in the race to acquire a stake in Escorts. "They are totally and only baseless rumors. As to us acquiring our stock, there are two very relevant and valid reasons. One is that the share price was right because it had come down recently. Secondly, we wanted to reacquire 5% which we had reduced from our voting block due to capital expansion in the last two years. We have done from the floor of the stock exchange and rebuilt our voting block from 32-37%," Rajan Nanda, CMD of Escorts told CNBC-TV18 on Friday. Escorts shares surged 5.6% on Thursday on the takeover buzz. The stock was further up about 2.6% at Rs 83.10 on NSE in morning trade on Friday. Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: Is there any truth to those rumors that there could be a potential takeover bid and is that the reason why you have been shoring up your stake in the company? A: Well, your first comment is absolutely accurate. They are totally and only baseless rumors. As to us acquiring our stock, there are two very relevant and valid reasons. One is that the share price was right because it had come down recently. Secondly, we wanted to reacquire 5% which we had reduced from our voting block due to capital expansion in the last two years. We have done from the floor of the stock exchange and rebuilt our voting block from 32-37%. As far as rumors are concerned, I don’t wish to comment. I don’t know of them and as far as we are concerned in the current context it would not be relevant. Q: The specific rumor is that perhaps M&M could be looking to buy an interest in Escorts. Can you confirm whether at any stage there have been discussions between the two parties, that’s yourself and M&M? A: We have not even met, we have not even discussed and there is no such thought in our mind, so it is totally baseless. Q: At this point I think you have already bought the maximum amount permissible in terms of a promoter buyback. Will you be looking to buy anymore via any other route? Are you comfortable with where your stake is right now? A: We will abide by the regulations that prevail in the country. But yes, the answer formidably is that we will keep building our block beyond 37% in the future. Q: What’s your comfort level of shareholding in the company? Reliance Mutual Fund who you bought stake from owns another 4%. When regulations permit, would you want to take that 4% stake up as well? A: It depends on the price and depends on the liquidity situation with us. As far as acquiring more stock, yes it gives us comfort, it gives us confidence because we have a tremendous optimistic outlook of our business value growth.