Foseco India: Stick to it

S. Muralidhar

BURMAH Castrol Plc of the UK, the parent company of Foseco India Ltd, is making an open offer to the shareholders of the latter for the acquisition of 12.77 lakh fully paid-up equity shares of Rs 10 each.

The British company (in turn, acting on behalf of its parent - BP Amoco plc) has offered Rs 221.86 per share to the shareholders of Foseco who opt for the open offer. The offer size represents 20 per cent of Foseco's equity share capital.

The offer opened on November 3 and closes on December 2 and the lead manager is J. M. Morgan stanley. Shareholders may opt for the open offer, which has been attractively priced. The offer price has been calculated as an average of the market price for the 26-week period ending March 2000 (the stock's price peaked at Rs 280 during this period). The Foseco India share closed at Rs on the National Stock Exchange on November 23, 2001.

BP Amoco Plc acquired control over a 58 per cent stake in Foseco India after its acquisition of Burmah Castrol at the global level. Earlier, Foseco Plc (original parent of Foseco India), a wholly-owned subsidiary of Burmah Castrol, held 58 per cent in the Indian subsidiary. The remaining 42 per cent of the shares in Foseco are now in public ownership. Foseco is listed on the Bombay Stock Exchange, Pune Stock Exchange and Calcutta Stock Exchange.

BP Amoco approached the Securities and Exchange Board of India (SEBI) for exemption from the open offer in 2000, stating that it proposed to sell off Foseco.

SEBI denied an exemption, prompting the UK-based company to appeal to the Securities Appellate Tribunal. The tribunal, in turn, ordered BP Amoco Plc to make an open offer to Foseco India shareholders as earlier directed by the SEBI, at Rs 226 per share.

Foseco India was originally promoted as a joint venture by Greaves, Mumbai, and Foseco, UK. It makes 400 different products for the metallurgical industry including the steel and foundry industries.

The products are in the nature of additives and consumables and improve the physical properties and surface qualities of castings as well as reduce costs of melting, moulding and castings.

The company's market covers integrated steel plants such as SAIL and Tisco, mini mills such as Mukand, Kalyani and Musco; and foundries such as Ennore Foundries, Lakshmi Machine Works, and so on. The company exports mainly to West Asia, Far East, Sri Lanka, Nepal, Kenya, Ghana, Bangladesh, Singapore and Taiwan. Foseco India's plants are located in Kolkata, Jamshedpur, Pune and Pondicherry.