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RAIDER Will This Man Win? Little-known Abhishek Dalmia is suddenly the centre of Gesco Corp's universe. Who is he and can he pull his raid off? By Ranju Sarkar
Mulji brushed the scare away lightly: "If there's a takeover bid, I will welcome that since shareholders will gain." Mulji and Ghanshyam Sheth, CEO of Gesco Corp, should have taken heed. For, seated among the shareholders was Sanjay Bakshi, an Abhishek Dalmia confidante. And even as Mulji made light of the takeover scare, Dalmia was busy mopping up shares of the Sheth-managed company. Events unravelled quickly since. By October 13, 2000, Dalmia and his associates had cornered more than 5 per cent of Gesco Corp stock and, five days later, informed the company, the Bombay Stock Exchange, and the Securities and Exchange Board of India. A full-blown hostile raid for the undervalued real estate company was on. Mortified by the thought of losing a company newly spun off in March this year from the Great Eastern Shipping Co. (Gesco), the Sheths scurried for help. Sheth appointed Uday Kotak's Kotak Mahindra as investment advisor; the duo then approached HDFC CEO Deepak Parekh for advice, who quickly put them in touch with the Mahindras. Their long-time friend and corporate chieftain, Anand Mahindra, readily lent financial firepower, by making his Mahindra Realty and Infrastructure Developers join the Sheths in making a counter-offer of Rs 36 per share versus Dalmia's Rs 27. At the time BT went to press, Dalmia was considering upping the ante on the counter-offer. Says Sheth: "The company was born only in March, and we had been putting our mind to consolidating the business. We were not even focused on these issues." Just who is Abhishek Dalmia?
The self-confessed Warren Buffet fan (he claims to have read all of Buffet's letters written to shareholders since 1977) is a scion of the Ajai Hari Dalmia family, whose patriarch is Jaidayal Dalmia, founder of Orissa Cement Ltd (OCL). When OCL-whose control passed on to his sons, Mridu Hari, Ajai Hari, and Raghu Hari, in 1975-split for the first time in 1999, Mridu Hari and Raghu Hari got OCL, and Ajai Hari was given the company's businesses in the US and UK, Utkal Investments (with holdings of about Rs 75 crore), and some stake in the family's privately-held granite business. The young Dalmia-who sports a pony-tail for religious reasons, despite his ca and internship with Pricewaterhouse Coopers-joined the family business in 1992, and was put through different functions at OCL. He's also worked in other group companies like Softek and First Capital, now managed by cousin Gaurav Dalmia. His family's overseas interests include trading, real estate, and auto dealerships. Following the decisive 1999-split, the 31-year-old Dalmia floated his own venture, Capital Ideas, an investment advisory. "I was more comfortable with numbers and markets," says the Modern School (Delhi) alumni. Not surprisingly, when Bakshi, also a Director on the Utkal board, made a phone call to Dalmia one Sunday morning last July to share some juicy details he had picked off Gesco Corp's annual report, Dalmia sat up. Within hours of discovering that the Sheth company was badly undervalued, the duo decided to start accumulating its shares. Predator with a purpose? Like his guru Buffet (a.k.a. the Oracle of Omaha), Dalmia believes in buying stocks cheap and staying invested for a long haul. But is his Gesco threat, a la Arun Bajoria, an arbitrage play? Dalmia denies it. "I wouldn't be bidding for it if I weren't serious," he says. There's no denying that the target is attractive. Although Gesco Corp earned just Rs 5.14 crore in net profits last year, it has properties in prime locations like Delhi, Mumbai, Bangalore, and Pune, accounting for an asset base of Rs 152 crore. And Dalmia seems intent to go the whole hog. He's already liquidated Utkal's investments to raise Rs 70 crore for the bidding battle. Following the first round of offer from Dalmia and counter - offer by the Sheths, Gesco Corp - whose equity is just Rs 28.76 crore -has seen its market value soar from Rs 23 crore in July to Rs 125 crore at the last count (on November 10, 2000). Already, Dalmia's tab (at Rs 27 per share for an additional 45 per cent stake) is at a high Rs 35 crore - and upping Sheth's new offer of Rs 36 would add Rs 17 crore to the bill, if he increases the offer price to Rs 40, a price beyond which the takeover bid may make little sense. Says Dalmia: "The best-case scenario is that we get hold of the company and the worst case is that we don't. We have to take a view on the counter-offer." The bottomline: even if the Sheths manage to wrest Gesco Corp back, it will be Dalmia (who can exit at the higher offer price) who'll be laughing his way to the bank. |
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Dramatic
irony in corporate sagas doesn't get better than this. On July 21, at
Gesco Corporation's annual general meeting (AGM), at the Y.B. Chavan
Centre in Mumbai, a shareholder stood up to ask the real estate company's
Executive Vice-Chairman Sudhir Mulji a question: "If your market cap
is so low (Rs 23 crore on that date) and the promoter stake less than 15
per cent, isn't Gesco Corp a sitting duck for a raider?"