Trouble began last year at PTL, when Actis managing director Donald Peck cited corporate governance issues and resigned.
NEW DELHI: The management tussle at Punjab Tractors Ltd (PTL) is set to intensify further.
Not only has the Burman family been quietly hiking its stake in the tractor company through the creeping acquisition route, it is gearing up to wrench control of the tractor maker by getting private equity major Actis and representatives of financial institutions to side with it.
And with the first board meeting after the Burmans acquired a board seat scheduled for Thursday, fireworks may be in store.
Industry watchers said the Burmans have two options before them.
The family could either buy out the nearly 24% equity stake held by Actis and become the single-largest equity holder in PTL or it could persuade the financial institutions — which collectively hold about 30% stake in PTL - to side with it.
Either way, the family will be able to acquire management control at PTL.
In the first scenario, the family would have to shell out over Rs 400 crore at the prevailing market price — it has already put in close to Rs 150 crore in PTL.
Trouble began last year at PTL, when Actis managing director Donald Peck cited corporate governance issues and resigned from the company’s board of directors.
And even before things between Actis and Mahajn could be sorted out, the Burman family evinced interest in PTL, terming it “undervalued” and began acquiring stake in it. From the initial 11% equity, the Burmans have raised their stake to beyond 12.5% and are keen to raise it further.
As on date, Actis and the Burmans control about 46% of PTL’s equity and the two together could now be gunning for the top post.
While in a notice to the stock exchanges, PTL has said its board of directors will meet tomorrow to approve audited financial results for 2005-06 and recommend equity dividend, a top official representing the Burman family said that a number of other issues (besides results) could also come up for discussion at the meeting.
“We are open to buy more of PTL in case it makes strategic sense for us and for the company,” he said without elaborating further.
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