Cigarette major VST's competitor, Godfrey Philips, has entered the race to buy the Andhra Pradesh government's 4.69 per cent stake in the company.
Godfrey Philips subsidiary Chase Investments on Thursday registered with the state public enterprise department to submit the price bid.
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The department on Wednesday extended an open invitation to all interested parties to register themselves by August 19.
The other contenders for the state government's stake include ITC's subsidiary Russel Credit, stock broker R S Damani-controlled Bright Star Investments, the Life Insurance Corporation of India, IL&FS and an individual, Shreyans V Mehta.
VST's principal promoter BAT has not yet registered possibly because it is yet to get an approval from the Foreign Investment Promotion Board.
The entry of Godfrey Philips -- the Rs 1,100-crore joint venture between global tobacco and food products giant Philip Morris and the KK Modi group -- gives a new twist to the battle for strategic stakes in VST.
"The 4.69 per cent stake (723,000 equity shares) that the AP government is planning to divest may be small. However, Godfrey Philips is seeing it as a strategic investment in view of its plans to get into the South in a big way. There is also a similarity in the product profile of both the companies since they operate in the middle and lower segments of the cigarette industry," a source associated with the development said.
Godfrey Philips' interest in VST also assumes significance in view of the fact that Damani -- through his investment firm Bright Star Investments -- controls 19.56 cent stake in VST, while BAT holds 32.16 per cent.
When contacted, Godfrey Philips Chairman K K Modi told Business Standard: "I am not aware of it. It could be a routine investment of surplus funds of the company. Anyway, 4-5 per cent is a small investment."
ITC, through its subsidiary Russel Credit, has a10.50 per cent stake in VST and the public sector insurance companies hold a 5.60 per cent stake.
"Going by the enquiries, we may get some more registrations before the deadline. We hope to get a good price for our stake in view of the strategic interest shown by various players," Deepak Kumar Panwar, principal secretary of the state public enterprises department, told Business Standard.
Just a day before the deadline for registration, the state public enterprises department widened the scope by extending open invitation to all the interested parties to submit bids.
The department had earlier sent letters only to 10 parties, which have 1 per cent or more stake in VST, seeking their participation in the divestment exercise.
The interest shown by players like Godfrey Philips has now prompted the department to ask the registered parties to submit their bids with a demand draft or a bank guarantee for 25 per cent of the offered price on or before August 29.
If the government accepts the offer, the balance payment will have to be made by the successful bidder by September 8.
