Ad Here  
June
July
August
September
October
November
 
 
L&T profit up by 11 per cent Gamesa to set up a plant in Nellore Daimler grows sales and share in India Hyundai to focus on SUVs and AMT variants Forging industry worried over lower supply of steel and its price Vellayan is back, after 150 days He excels in the nuts and bolts of entrepreneurship Increasing market share Titan Company – sales recovery to kick in A niche in FMCG business... From the toughest to the best year TN government keen on revival of operations at Nokia complex Tata Motors bets on new launches E.I.D Parry (India) Ltd: another sweet year Housing demand revival L & T set bigger ambitions in defence business Kone India eyes further growth in elevator market A welcome initiative-even critics are recognised Sivasankaran enters taxi space to take on Uber and Ola Ponni Sugars (Erode) Ltd: not so sweet 2012-13 Welcome focus to improve rural India... 29 per cent jump in TCS revenues Bajaj Finserv – Q1: fare well Smartphone onslaught by Chinese brands Tata gets 4-star rating for Zest L & T’s floating dock for navy M & M unveils driverless technology for tractors Shriram Life clocks more than Rs.1000 crore premium in 2015-16 Preparing for the next growth curve Tata Motors charts investments in PV and CV businesses HPCL plans Rs.61,000 crore capex over 5-years Is this a generation gap? Aurobindo Pharmacy: good turnaround New India Assurance posts impressive show ITC chairman calls for policy impetus to transform agriculture When small is not so beautiful… Tata Motors aims to be among the Top 3 global CV & PV firm Toyota and Suzuki to introduce EVs in India by 2020 Consolidating leadership position in smartphones LVB posts 31 per cent growth in Q1 net profit Tata Motors joins compact SUV bandwagon with Nexon AL introduces Guru & Partner Chinese smart phones flourish in small towns too! L&T bags the Mumbai Trans-harbour link order Last stages Daimler’s truck exports from Chennai cross 5000 units ITC – steep excise hike Right to privacy – now it’s fundamental! Eyes strong growth in 2016-17 Wabco launches safety system Emami – a new growth mantra The unexpected exit IOB on turnaround path Nissan exit shouldn’t affect ALL Rane targets Rs.5500 crore topline by 2018-19 TI Cycles plans retail expansion to drive sales for premium bicycles Singur minus Nano – victory or folly? Tata Steel, ThyssenKrupp sign MoU to merge European units Are they really independent? Sundram Fasteners rejigs international AL secures orders for 3600 buses RoC in the dock... TVS Automobile invests Rs.75 crore in start-up firms Land wars Hindalco – re-rating V-Guard launches app-enabled water heater system Carnival Films acquiring 3000 screens pan India AL wins Deming prize again It takes two to tango Hyundai India achieves 7 mn production at Chennai factory Solar installations exceed 2015 capacity in five months Smooth sailing of SAIL Ode to Ratan Tata Back in growth mode TVS Srichakra plans capacity expansion The gainers and the losers Mercedes-Benz sales continue to zoom Yamaha unveils scooter boutique Record two-wheeler sales PSU non-life firms seek to protect share PPP model for infrastructure development Michelin to double Chennai capacity CAPITAL NOTES Dish TV – subscriber additions encouraging Maruti – for young buyers
 
Land wars
Recently, at SV Global Mills Limited (a Binny Group Company), the promoter group led by M Ethurajan and his son E Shanmugam has wrestled control from its veteran director Natarajan, another promoter who steered the company through difficult times.

At the AGM, the shareholders rejected the re-appointment of S Natarajan as a director of the company’s board.  Given that SV Global is a listed company, this triggers speculation that SEBI may ask for Open Offer process to be implemented in accordance with SEBI’s Takeover Code. At the heart of the whole issue is land and properties worth Rs 2000 crore.

When John Binny founded Binny and Co in 1797 as a clearing and forwarding agency (which later ventured into textile business as Buckingham Mills in 1876, followed by the Carnatic Mills in 1881) he would have never imagined that the company would one day, be fought over the real estate the company holds.  Two centuries later the landbank value held by the ex-BIFR Binny Group Companies exceeds well over 6000 crore.


Splitting the group to 3 companies

John Binny established Binny & Dennison in 1799. The firm was an agency house representing British interests in South India.  Over the years Binny Group evolved by amalgamation of various textile and allied companies like the Buckingham & Carnatic, Banglore Woollen, Cotton & Silk Mills, Madura, Ganges Transport & Trading, Binny & Company and Binny’s Engineering Works.  

In 2012, the shareholders of Binny Group voted for a demerger to amicably settle ownership issues.  The goal was to distribute the company’s landbank  in fair measure to promoters.  This would be done by splitting the group into 3 different companies.  The demerged businesses are called Binny, Binny Mills and SV Global.   

As per the demerger, S V Global Mill went to M Ethurajan and his son E Shanmugam, Binny Mills to V R Venkatachalam  and the existing Binny to M Nandagopal.  The fourth promoter, S Natarajan, remained the common promoter with nearly 19 per cent stake in all the entities.  All four promoter groups together hold 75 per cent while the rest 25 percent is held by the general public.  After the demerger, the promoters transferred shares in companies, which one did not control in favour of the one who would be controlling it.  Public shareholding in all the three demerged remained at 25 per cent.

 

Promoter feud at SV Global Mills

The present feud arises because the promoter group led by M Ethurajan and his son E Shanmugam, want to retain the entire control over the company.  However, this does not seem to go down well with Natarajan, a veteran promoter director who was also one of the original four promoters of Binny when the Udayar group took over the sick textile company in 1987.  

It must be noted that  Natarajan is widely acclaimed for reviving the fortunes of the 200-hundred-year-old textile company and also credited to have taken the company out of the clutches of BIFR thereby unlocking the potential of the company’s real estate.

If the company was still with BIFR, every decision by the shareholders or the Board of the company  would require approval by the BIFR board,  which in business terms made any deal simply unworkable.

 

Will SEBI Takeover Code kick in?

If all the procedures of Companies Act 2013 had been duly followed and the majority of shareholders had decided to side with M Ethurajan against his re-appointment, then in all fairness, that decision must be respected.  However if procedures have been violated then Natarajan can approach the Company Law Board or National Company Law Tribunal as the case may be.

 

How to solve the dead lock at SV Global?

Ideally, the Udayar Group can sit with Natarajan and identify lands which can be transferred to Natarajan for his 19 percent stake in the company.  The company can again be demerged into two new entities with the approval of court.  Courts generally accord approvals unless creditors or any other stake holders raise objections. This way the group can solve its problem rather than enter into long legal battles which helps only their law firms.  

Any other compromise can also happen.  If such compromise happens, in a year we can hope to see ‘new gated premium real estate projects’ with swimming pools and jogging tracks on the Binny Mills properties.

 

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com