Bhagyanagar Castings -- Not to be cast away

Recommendation:Accept

B. Krishnakumar

SHAREHOLDERS of Bhagyanagar Castings could accept the proposed open offer from Mr. Ramesh Babu Potluri.

The acquirer proposes to acquire 6.54 lakh fully paid-up shares at Rs. 4 per share and 4.77 lakh partly-paid shares at Re. 1 per share.

Bhagyanagar Castings was incorporated to take on the project of making sand castings. The project could not be implemented as the company could not conclude the financial closure of the project. As a result, it is yet to commence commercial activity.

Given this backdrop, the proposed open offer would be a good exit avenue for the existing shareholders of Bhagyanagar Castings. Accepting the offer would also make sense as the shares of the company suffer from poor liquidity. Bhagyanagar's shares are listed only at Hyderabad and Ahmedabad stock exchanges.

Considering the lacklustre business prospects for the castings industry, the fact that the company is yet to commence operations and the poor liquidity, existing shareholders of Bhagyanagar Castings could accept the open offer.

Features

Mr. Ramesh Babu Potluri and his associates are making an open offer to acquire a 30.94 per cent equity stake in Bhagyanagar Castings. The offer is at a price of Rs. 4 per share.

The acquirers have agreed to acquire 30.94 per cent stake held by Mr. T. V. V. S. N. Murthy and other promoters in Bhagyanagar Castings at Rs. 0.50 per share.

The Bhagyanagar Castings stock is currently listed at the Ahmedabad and Hyderabad stock exchanges.

The lead manager to the offer is Nagarjuna Financial Services Private Ltd.

The offer opened on March 27 and closes on April 25.