Punjab Tractors divestment back on track, KPMG named advisor

NEW DELHI: The Punjab government has appointed KPMG as its advisor for the strategic sale of the entire 23.5% stake of Punjab State Industrial Development Corporation (PSIDC) in Punjab Tractors, kicking off the much-awaited disinvestment process in the tractor major.
Sources said the financial bids for the strategic sale is expected in the next one-two weeks and the entire process is expected to be wrapped up in a month. KPMG is currently in the process of finalising the preliminary information memorandum for the financial bids in consultation with Punjab government and PSIDC .
Sources said the information memorandum will also clarify the issue of whether the successful bidder of PTL will have to come out with open offers for two of PTL’s associate companies — Swaraj Mazda and Swaraj Engines. PTL holds 34% in Swaraj Engines and 29% in Swaraj Mazda. Under the SEBI’s takeover code, the change in promoters in PTL will trigger off the open offer clause for the two PTL associate companies.
Significantly, KPMG is learnt to have indicated to PSIDC that the Punjab Tractors’ shares could fetch between Rs 300 and Rs 350 a share. The stocks of the company today traded at around Rs 121 per share with a trading volume of 72,708 shares in BSE and 18551 in NSE. Its 52-week high was Rs 196.
Mahindra & Mahindra, Escorts, L&T - John Deere, TAFE, SAME Tractors, Ford New Holland and the Eicher group are among the domestic and MNC tractor majors which are in the race for buying out PSIDC’s stake in Punjab Tractors. Besides, private equity fund Warburg Pincus is also learnt to be in the race for acquiring stake in the tractor major that has about 20% market share in India. In addition, PTL has 60% market share in 35 HP segment.
Industry analysts, though refused to put a figure, said the company share could attract a substantial premium to the market rate as the prospective buyer could get controlling stake in the company. Besides the 23.5% stake of PSIDC, the successful bidder will have to come out with the mandatory open offer for another 20% stake in the company, thus taking its total holding to 43.5%.
PSIDC was reportedly expecting a minimum of Rs 300 crore from its stake sale — Rs 225 crore by way of price for its 23.5% stake and another Rs 75 crore for management control premium.