NEW DELHI, February 6: The government has not changed its stance on the effort of British chemical major ICI Plc to buy shares of a promoter in blue-chip Asian Paints India Ltd (APIL), a senior government official said on Friday.The government stance on the issue has not changed, a senior official in the industry ministry said.
Since the Foreign Investment Promotion Board (FIPB) refused to consider the ICI application for investing in APIL, the London-based company wrote to the government indicating its understanding of the legal position on the matter.
"We are in receipt of that letter and we are contemplating on writing a reply soon," the official said.
"They had written to us after the FIPB refused to take up the application. Since they wrote, they deserve a reply and we will do so any time now," he said.
ICI's move to buy the 9.1 per cent stake of APIL promoter cum managing director Atul Choksey, in August last year became a major controversy with the industry minister Murasoli Maran sayingthat "corporate raiders" were not welcome.
The British company applied to the FIPB in October 1997 to invest in the APIL shares.
However, FIPB refused to entertain the application without a supporting board resolution from the Indian company.
In its letter to the industry ministry last month, ICI had stated its understanding of the legal position in buying the shares and said it would not be tantamount to a takeover nor entitlement to a seat in the board.
In August last year, the parent company announced that it had agreed to purchase, subject to regulatory approvals, 9.1 per cent of the shares of APIL from Kotak Mahindra Capital Company (KMCC) for a sum of Rs 128.9 crore. With the deal not going through fully, KMCC sought and obtained an extension from Reserve Bank of India (RBI) to hold the shares and ICI declared that it would wait for a new government to initiate another dialogue.
ICI Plc has already met the other three promoters in August to explain its position and sought to forge a friendlyrelationship with the promoters and shareholders of APIL and explore a future alliance between its operations in India and those of APIL.
ICI (India) spokesman, had earlier said, "Our understanding of the law is that board resolution is not required."
"We have gone to FIPB on the basis of our understanding of the matter regarding FIPB guidelines of January 1997, earlier supreme court rulings on acquiring shares, takeover code of SEBI and the amended Securities Contract Regulation Act," he said. The spokesman said section 22 (a) of the amended Securities Regulation Act, which gave board the power not to register share transfer, was repealed in 1996 with retrospective effect."Our bid to acquire 9.1 per cent shares of APIL does not constitute a hostile takeover bid as per the takeover code of SEBI either, which has set a limit of 10 per cent," the spokesman said.
He said when ICI brought the money as foreign exchange, permission of the RBI was taken under the Foreign Exchange Regulation Act.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
