Date:29/06/2008 URL: http://www.thehindu.com/2008/06/29/stories/2008062956101300.htm

National

Subhiksha picks up major stake in Blue Green

K. T. Jagannathan

The merged entity will be known as Subhiksha Limited

To make open
offer to acquire
another 20 %
Company plans to enter consumer durable space

R. Subramanian

CHENNAI: Subhiksha Trading Services Ltd., a leading food and grocery discount retailer, has picked up a majority stake in a little known Blue Green Constructions and Investments Limited, a Chennai-based firm.

Acquisition at par value

Subhiksha, according to its promoter R. Subramanian, has acquired 40 per cent stake in the Chennai firm. Blue Green has a paid-up capital of Rs. 5 crore. The acquisition was done at par value, Mr. Subramanian said.

Sixty-seven per cent of the paid-up capital of Blue Green is held by the promoters. The public holds the balance.

The respective boards of Subhiksha and Blue Green will meet on Monday to consider the merger of the two companies.

The merged entity will be known as Subhiksha Limited and is expected to list its shares on the National Stock Exchange, Bombay Stock Exchange apart from Madras Stock Exchange, where the shares of Blue Green are currently listed.

Subhiksha would also come out with an open offer to the public to acquire another 20 per cent shares as mandated by the Securities and Exchange Board (SEBI) of India under its takeover guidelines.

The ‘reverse merger’, observers feel, will help the unlisted Subhiksha to get listed without going through the normal route. This is also seen as a move to create an ‘exit window’ for investors in Subhiksha.

The promoters led by Mr. Subramanian hold 60 per cent stake in Subhiksha. ICICI Ventures hold 23 per cent and other institutions 15 per cent. Two per cent is held by the employees under ESOP (employee stock option plan).

Mr. Subramanian said Subhiksha was planning to enter the consumer durable space. Blue Green, which had just entered this space, provided the right platform for Subhiksha. Subhiksha reported a turnover of Rs. 2,300 crore during 2007-08. In the current financial year, this would go up to Rs. 4,500 crore. “This transaction will ensure that Subhiksha has access to capital and will continue to be on the fast track of growth. It will also enhance value for our stakeholders and help us achieve our objective of becoming a $5 billion company,” he said.

Apart from food and grocery, Subhiksha was also a leading mobile retailer. “The company plans to have two million sq. ft. of retail space in consumer durable in the next year,” he said.