Who Is Golden Tobacco's Hostile Bidder?

Pramod Jain has a fairly colourful record of investments

Pramod Jain, a minority shareholder in Sanjay Dalmia-controlled cigarette-maker Golden Tobacco Ltd (GTL), made news with his hostile offer to acquire another 25% holding in the company at a hefty Rs101 a share. Who is Pramod Jain? A little digging reveals that he wasn't always hostile to Sanjay Dalmia and has a fairly colourful record of investments.

Mr Jain and his companies, Pranidhi Holdings and JP Financial Services, acquired a 6.47% stake in GTC when Mr Dalmia wasn’t able to redeem 890,000 shares pledged with the group. Mr Jain has since told the media that his open offer is aimed at ensuring that Mr Dalmia does not alienate GTC assets to meet his other obligations, including the large sums owed to India Bulls.

Mr Jain was also a director in GHCL, another Sanjay Dalmia company. Mr Dalmia had accused Mr Jain of trading in the GHCL shares without making appropriate disclosures. The latter resigned from the board in April.

In May 2006, Mr Jain was also involved in what turned out to be an extremely curious takeover bid for Cinerad Communications through his Delhi-based group company, Pranidhi Estates Pvt Limited. This company belonged to the noted film maker Zafar Hai and his wife Colleen Hai. Mr Jain's investment companies first acquired a big chunk of 25.80% of the shares from the Hai couple for Rs9.25 each and went on to make an open offer to the public to acquire another 20% at the same price. 

Strangely, in less than a year, on 29 January 2007, Mr Jain resigned from Cinerad and his investment company sent a letter to the board asking that his investment vehicle, Pranidhi Estates, which made the open offer, should not be considered a part of the 'promoter group'. As of July 2009, however, the promoter group shareholding in Cinerad continued to be around 38.83%. This stake is held by India Emerging Capital Market Pvt Ltd which is listed in stock exchange records as a Promoter Group holding. Individual shareholders hold nearly another 40% of the equity while some corporate bodies hold 20%. Institutional investment is negligible.

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