Ramco Industries Limited is set to witness a substantial internal restructuring as Ramco Management Private Limited (RMPL) and Rajapalayam Mills Limited (RML), both key members of the promoter group, are acquiring 16.23% of shares from The Ramco Cements Limited (TRCL). This acquisition, slated for completion on or after October 28, 2024, involves the transfer of 1.07 crore shares by RMPL and 33.91 lakh shares by RML, significantly increasing their stake in Ramco Industries.

The share acquisition is categorized under SEBI’s regulation 10(1)(a)(ii), allowing it to bypass the mandatory open offer requirement typically triggered during substantial acquisitions. This regulation pertains to inter se transfers within the promoter group, exempting such transactions from making an open offer, given that the acquirers comply with specific SEBI norms. The promoters have confirmed that the acquisition price will be determined as per SEBI guidelines, ensuring the price does not exceed 25% above the volume-weighted average market price of Ramco Industries shares during the 60 trading days leading up to the acquisition.

Rationale Behind the Acquisition

The move to consolidate shares within the promoter group strengthens the control of Ramco Management and Rajapalayam Mills over Ramco Industries, aligning with the group’s long-term strategic interests. This transfer is part of a larger plan to streamline ownership within the Ramco group of companies, fostering improved management and operational efficiency.

As part of the deal, Ramco Management Private Limited will see its shareholding in Ramco Industries increase from 2.19% to 14.51%, while Rajapalayam Mills will expand its stake from 9.68% to 13.59%. Post-acquisition, the total promoter group shareholding will further solidify their dominance over the company’s ownership structure.

SEBI Compliance and Price Determination

Given the nature of this acquisition, SEBI regulations require that the price at which the shares are acquired be in strict compliance with the guidelines under regulation 10(1)(a). The promoter group has declared that the acquisition price will not exceed the permissible limit of 25% above the volume-weighted average market price for the preceding 60 trading days. Should the shares be classified as infrequently traded, the price will be determined based on clause (e) of sub-regulation (2) of regulation 8, which mandates a different method of calculation.

Both RMPL and RML have confirmed their commitment to complying with the disclosure requirements outlined in Chapter V of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, ensuring transparency throughout the process. The disclosures made over the past three years regarding this acquisition have been furnished, demonstrating full regulatory adherence.

What Does This Mean for Ramco Industries?

This strategic share transfer is indicative of the promoter group’s confidence in the future prospects of Ramco Industries Limited. By consolidating ownership within the family-run promoter group, the move is expected to enhance corporate governance and decision-making agility, further strengthening the company’s market position. Investors and stakeholders will be closely monitoring how this internal restructuring impacts the company’s stock performance and operational efficiency.

Given the SEBI regulations governing such acquisitions, market participants can rest assured that the deal complies with the necessary legal framework. The emphasis on transparent pricing and compliance with disclosure norms sets a precedent for future transactions within promoter groups in India’s corporate landscape.

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The promoter group acquisition represents a significant development in Ramco Industries’ journey, and the seamless inter se transfer highlights the close-knit management practices characteristic of the Ramco group. With the completion of this transaction, the company is likely to embark on a new chapter, solidifying the role of Ramco Management Private Limited and Rajapalayam Mills Limited in steering the company forward.

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