Gujarat NRE Mineral Resources Ltd, which recently postponed its plans for an initial public offering (IPO), has thought up a rare way to placate a small bunch of minority shareholders.
The unlisted holding company of group flagship Gujarat NRE Coke Ltd, promoted by Arun Kumar Jagatramka, is issuing bonus shares in the ratio of 1:2, but only to the public shareholders of the unlisted company who currently account for just 7.5% of the company’s Rs477.72 crore equity capital.
Their approval has been sought by May 23.
“Arun Kumar Jagatramka, chairman and managing director, his family members, companies and other entities belonging to the promoter group, have intimated to the company that they have waived their respective entitlement to the issue and allotment of proposed bonus equity shares in the interest of the company and other shareholders. This move of the promoters would mitigate to a great extent the impact of equity dilution due to proposed issue of bonus equity shares,” said the notice issued to the shareholders.
The notice says that the promoters, who hold 92.5% in Gujarat NRE Mineral Resources, are not subscribing to restrict equity dilution. However, a section of retail investors believe this is being done to keep them happy as they have been waiting for the IPO to come out for over a year now.
Earlier, Anil Ambani had made a similar move, issuing bonus shares to only public investors in Reliance Power out of the high premium collected during the mega IPO.
This is the second time that Gujarat NRE Mineral Resources is issuing bonus shares to non-promoters. In 2009, Jagatramka came out with 1:1 bonus issue for retail investors.
“This rare action of corporate governance of making the external shareholders the real beneficiary of the bonus issue had not only reduced the cost of shareholding of the non-promoter shareholders by half, but also led to a very little dilution in equity capital,” the notice says.
Apart from holding a controlling 33% stake in Gujarat NRE Coke, Gujarat NRE Mineral Resources controls 38% stake in Gujarat NRE Metcoke Ltd, which has 0.1 million tonne capacity, and through its wholly-owned subsidiary, Gujarat NRE Oil Ltd, has 90% interest in two onshore exploration blocks in Australia.
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