India Inc is seeing yet another family feud - this time between Gujarat NRE Coke founder Girdhari Lal Jagatramka and his son-law, Ratan Lal Tamakhuwala, who owns Austral Coke.
Gujarat NRE, India's largest independent met coke producer, has accused Austral Coke of mistatements and wrongly using the company's name to sell its initial public offer of shares, which opened on Thursday.
Austral hit back soon, saying it will file a defamation case against the Gujarat NRE promoters in the Calcutta High Court. In a statement to the National Stock Exchange, Gujarat NRE today alleged that Austral is misrepresenting capacity-related facts, including the claim of producing 375,000 tonne of low- ash metallurgical coke capacity.
Austral has a mere 70,000 tonnes of coke and operates two chimneys instead of four. The two remaining are under construction, the Gujarat NRE statement said.
Gujarat NRE Coke is owned by Girdhari Lal Jagatramka and his son A.K. Jagatramka.
Austral's initial offer for shares received subscription of 1.13 times on the first day of its offer.
Rishi Agarwal, managing director of Austral Coke, said "this sort of behaviour from Jagatramka was expected. It's a long standing family feud and Gujarat NRE is known for spreading such rumours. Earlier too, the company had filed a case against us when we had launched the IPO of Gremach, another group company. They had made Sebi a party to the case at that time, but they eventually lost the case."
Gujarat NRE has also accused Austral of falsely claiming to be the orginal promoters of Gujarat NRE without mentioning that the owners were ``expelled'' in 1997 for fraudulent practice.
"It is our claim that most of the disclosures made by Austral Coke in its draft red-hearring prospectus are fraudulent. It is also using the name of our company, which is a market leader, to promote its IPO," AK Jagatramka told Business Standard.
Jagatramka also alleged that Tamakuwala was never the promoter of Gujarat NRE as mentioned in the prospectus. Countering this allegation, Agarwal said, "One can easily check the prospectus of Gujarat NRE when it had come with an IPO and eveyone will know that Tamakuwala was the real promoter and Jagatramka was not even present on the board."
This is indeed not the first time that the two close relatives, who are founder-members of Gujarat NRE, have locked horns. In December 1997, Tamakhuwala, then managing director of Gujarat NRE, was expelled from the board on allegations of financial irregularities. According to AK Jagatramka, some of the earlier cases are still pending with the Calcutta high court.
Tamakhuwala and his son Rishi Raj Agarwal jointly floated Gremach Infrastructure Equipments & Projects, which has a market value of Rs 135.89 crore (Rs 1.36 billion) at today's share price of Rs 89.30.
In Gujarat NRE, Tamakhuwala had about 1.5 per cent stake, which he sold after his exit from the company. In Gujarat NRE, which has a market cap of Rs 3,530.96 crore (Rs 35.31 billion) at Thursday's share price of Rs 104.75, the promoters have 40.7 per cent stake.