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October 7, 1997


Subra angling to take over Silverline

The US-based Subra International, an non resident Indian-promoted software company, is all set to take over Bombay's Silverline Industries Limited.

The NRI company, which recently picked up a 22 per cent stake in SIL from some of the NRI shareholders, is making a public offer to acquire an additional 20 per cent.

The public offer will open on October 27 and remain open till November 29,
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Angling for Silverline
1997. Subra International, run by a group of US-based Indians, develops software products and does exports.

India's Foreign Investment Promotion Board has cleared Subra's proposal to acquire a 51 per cent stake in Silverline. Following the FIPB okay, Subra has deposited Rs 40 million in an escrow account to get the secretariat of industries approval.

The existing promoters of SIL has a total holding of 43 per cent. This means that the NRI predator has to acquire a minimum 2 per cent more equity for acquiring a controlling stake.

Promoted mainly by Ravi Subramanian, SIL has a host of NRIs as prominent shareholders. They include US-based Arjan Daswani and Sharma, Taiwan-based Paramjeet Bhalla and Hong Kong-based Ram Mahtani.

In accordance with the takeover code Subra International has offered a price of Rs 21 per share, which is the average price of the shares based on the last six months of trading. At this price Subra will be acquiring 7.6 million shares which constitute 20 per cent of the company.

Though currently SIL shares are trading in the Rs 25-22 range, market watchers are sure that the shareholders of Silverline will sell their stake to Subra for Rs 21 per share. The selling spree is evident from the decline in the share price, which came down to a low of Rs 22.20 in September from a high of Rs 33 in August.

In August this year, promoters were accused of insider trading, which the authorities believe led to a rise in Silverline prices. Market players say that holders of Silverline have discounted the price rise due to alleged insider trading and the price is likely to further come down.

Incorporated in April 1992, SIL has two 100 per cent owned software export oriented units at Bombay and Madras. It is also into the business of computer education and training.

Significantly, Silverline prices declined immediately after listing.

After the listing trading commenced in Silverline at Rs 75-57 in September 1992, it reached a high of Rs 81 in October that year and started falling since then.

After the acquisition of 20 per cent of the shares, the stake of Subra in SIL will go up to 42 per cent. Subra has already acquired a 22 per cent stake in the Indian software firm from the non-resident Indians.

Since there is no certainty that Subra will be able to buy all the 20 per cent from the public, Subra plans to further acquire 13 per cent from non-resident Indian shareholders of Silverline.

- Compiled from the Indian media

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