Mumbai, Feb 27: Financial institutions are planning to chalk out a joint strategy in the face of increasing takeover threats -- hostile or otherwise. They are setting up an inter-institutional committee in the next few days to frame guidelines for a collective response to takeovers.A senior institutional source said the objective of the committee would be to frame general guidelinesm, within which institutions would confine their response to takeover bids.
"The response will vary from case to case, from institution to institution. The panel, however, can lay down broad parameters," sources said.
The institutions could even revive the Basudev Sen committee, which prepared the joint institutional disinvestment policy instrument (JIDPI) in October 1996, sources added.
Unit Trust of India's (UTI's) Sen was the convenor of the five-member committee, which consisted of representatives from Industrial Development Bank of India (IDBI), Life Insurance Corporation (LIC), Industrial Credit & InvestmentCorporation of India (ICICI) and Industrial Finance Corporation of India (IFCI).
"The brief of the earlier committee was different. It looked at ways of divestment in instances where institutional investments are at stake. Still, that committee can be revived in the present context," sources said. The policy instrument prepared in 1996 laid down guidelines for collective disinvestments. There has, however, not been an instance of insititutions following the norms -- carefully crafted after much deliberation -- for divesting their holdings.
"That was a different situation. The objective was primarily to go in for collective divestment where the institutions have lost confidence in existing promoters. The present scene is different," a term-lending institution's senior executive said. "The situation is extremely fluid.
Sterlite kicked off the trend and within a fortnight India Cements joined the fray. Takeover threats -- whether hostile or friendly -- have become a reality in the financial sector and weneed to frame broad guidelines to respond to the emerging scene," a UTI source said. Unit Trust and Life Insurance officials will soon meet to discuss issues relating to the takeover battle beteen Sterlite and Alcan for controlling Indal. The two along with General Insurance Corporation will also discuss the India Cements offer to acquire Raasi Cement. The institutions hold about 35 per cent in India Cements and 20 per cent in Raasi Cement.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
