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Dalmia raises Rs 200 million to finance Revathi buy

Bhupesh Bhandari

The A H Dalmia group has raised Rs 20 crore (Rs 200 million) debt to bankroll its acquisition of the Coimbatore-based Revathi Equipment Ltd.

"Of the total acquisition cost of Rs 46 crore(Rs 460 million), the group will be bringing in Rs 26 crore(Rs 260 million), while we have got a line of credit of Rs 20 crore (Rs 200 million) from some non-banking finance companies," Abhishek Dalmia of the A H Dalmia group said.

Utkal Investments, a closely held firm, is bringing in Rs 26 crore (Rs 260 million) for the acquisition. Utkal was earlier an investment company of Orissa Cements. When the group moved out of OCL, it got control of the investment firm.

In 2000, when the group mounted a takeover bid for the Sheth family's Gesco Corporation, it was Renaissance Estates, a subsidiary of Utkal Investments, which was chosen as the vehicle for the acquisition.

However, the group exited the race after the Mahindras came into the picture as a white knight for the Sheth family. Utkal had liquidated investments worth Rs 70 crore (Rs 700 million) to fund the acquisition.

It also appears that the A H Dalmia group has no plans to get involved in the day-to-day management of Revathi Equipment. "We will leave the day-to-day management to professionals. Our involvement will only be at the board level," Abhishekh Dalmia said.

Yesterday, the group signed a deal to acquire 40 per cent stake in Revathi held by the Atlas Copco group of Sweden for Rs 29.95 crore (Rs 299.5 million).

As required by the takeover code of the Securities and Exchange Board of India, Utkal will now make an open offer for another 20 per cent Revathi Equipment shares at the same price. If the open offer is fully subscribed, Utkal will end up with a 60 per cent stake in the company.

Revathi is engaged in the business of blast-hole drilling rigs which are used for drilling holes in coal mines. These holes are then filled with explosives to open up the mine for recovering coal.

According to Dalmia, the company has been logging a turnover of Rs 45-50 crore (Rs 450-500 million) in the last five years and has been reporting a profit after tax of Rs 8-9 crore (Rs 80-90 million). "It has a very steady business," he said.

At present, Revathi Equipment has seven directors on its board including three nominees of the Atlas Copco group and B K Poddar, the original promoter of the company.

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