India's second largest private sector shipbuilder Bharati Shipyard Ltd. is set to acquire an additional 20-per cent stake in Great Offshore Ltd., a leading offshore oilfield services provider through an open offer in accordance with the Securities and Exchange Board of India (SEBI) regulations.

The decision was announced by the Bharati board after a meeting on Saturday following the resignation of the Great Offshore vice-chairman and managing director Vijay Sheth, the erstwhile promoter of the company.

Barely three weeks ago, Bharati acquired 14.89 per cent stake in Great Offshore at Rs315 a share for a total cost of Rs174 crore in lieu of a loan, becoming its largest shareholder. (See:Bharti Shipyard picks up 14.9 per cent stake in Great Offshore)

Bharati managing director P C Kapoor said: ''We want to consolidate our holding, and we will fund the acquisition through internal accruals.''

The takeover will be carried out thorough Natural Power Ventures, a wholly-owned subsidiary of Bharati. The company is expected to spend around Rs250 crore for the acquisition.

''The purpose of the open offer is to consolidate our investment in Great Offshore. Considering the potential of offshore services business, we have decided to increase our investment in Great Offshore. This acquisition would provide enhanced stability to the existing management in Great Offshore and maximise shareholder value for both companies,'' Kapoor told in a statement.

"There is a lot of synergy between the two companies. We are builders of offshore vessels and they are running offshore vessels,'' Kapoor said.

"With oil prices going up, the forecast for the offshore sector is bright and we want to take advantage of opportunities there." Kapoor added.

Great Offshore which was a subsidiary of Great Eastern Shipping, India's private sector shipping giant, became a separate company in 2006 following a hostile family dispute when one of the promoters Vijay Sheth moved out to take the helm of Great Offshore.

Bharati is expected to finalise the open offer price at a board meeting early this week.

As per SEBI regulations, the open offer should be made at a 26-week average stock price or 2-week average price, whichever is higher. The open offer is expected to be managed by SBI Capital Market.

The 6-month average share price stands at around Rs256 whereas the 2-week price is Rs326.

Analysts say that such and instance has happened for the first time in Indian corporate history, a business promoter losing control of the company due to pledging of the shares for loans and subsequently losing them.

Great Offshore promoter Sheth had pledged the shares with two subsidiaries of Bharati to raise Rs240 crore last year. Sheth currently holds only 0.84 per cent stake in Great Offshore, whereas his cousins hold around 5 per cent stake.

Great Offshore reported 68 per cent jump in net profit at Rs71.3 crore in the March quarter. The total income also registered a growth of 32 per cent to Rs269.6 crore.

Bharati reported a 7 per cent drop in net profit during the March quarter to Rs30.3 crore primarily on account of substantial interest payments. However, the overall turnover rose 48 per cent to Rs306.7 crore.

On Monday morning at 11.00, the Great Offshore was trading at Rs378.05, 3.9 per cent higher than Friday's closing price at BSE, and Bharati was trading at Rs167.10, almost 10-per cent higher than the previous close.