Mumbai, Mar 12: The Indian Aluminium (Indal) board has recommended to its shareholders the rejection of Sterlite's open offer for buying 20 per cent of the company's stake, without openly and formally suggesting a sell-out to Alcan Aluminium's counter-offer.A company release, which substituted for a hastily cancelled news conference scheduled after the board meeting, devoted a 78-word paragraph on its 34.6 per cent stake-holder Canadian major Alcan, and, by implication, suggested that shareholders should either hold on to their shares or sell them off, if at all, to Alcan.
The board's cautionary advice to its shareholders was based on the recommendations of a committee of independent directors, comprising non-executive vice-chairman Susim Mukul Datta, NJ Jhaveri and Deepak Parekh, which formed its opinions after hearing presentations from the Sterlite management, the Alcan officials and the Indal executive management.
"The board chose not to comment on the Alcan offer itself, but the release issued by the company makes it clear that one choice that the board does not recommend to its shareholders is a sellout to Sterlite," a spokesman said.
The other two choices, the spokesperson said when asked, were first, to either accept the Alcan offer, or second, to hold on to their holdings.
Outlining the reasons for rejecting the Sterlite bid, chairman Datta said in the release: "The merits of the open offer were evaluated, and the committee came to an unanimous conclusion that the bid by Sterlite is not in the interests of Indal, its shareholders or other stakeholders. "Sterlite can make little contribution, nor can it bring extraordinary strengths on the table even managerially, let alone technology for implementing Indal's business strategy or capital-expenditure programme." The board meeting was attended by all directors, save for Deepak Parekh and SR Sule as they are out of the country. LIC's SB Mathur attended his first board meeting.
The two earlier financial institutions' nominees Lalita Gupte and SR Salunkhe had resigned in a board meeting, earlier this year. The Alcan representatives were present at the meeting, but chose to abstain on the matter.
Though it has an unequivocal stand on the Sterlite offer, the Indal board has not made any comment on the Alcan counter offer but has stressed on the strong ties it has with the Canadian major.
Alcan has made a counter offer of Rs 105 against Sterlite's Rs 90 a share.Alcan had earlier termed the Sterlite offer as "unsolicited and unfriendly". Alcan officials have also said they would review their relationship with local aluminium major, if Sterlite were to get any substantial shareholding in Indal.
"Indal is not only a pioneer, but a market leader in its main business areas. It is a strong company with a prudent financial practices and enjoys tremendous goodwill and trust with all its stakeholders and joint venture partners. Our growth plans are under implementation, and we are confident that the benefits will be realised in the next two to three years," Tapan Mitra, Indian Aluminium's vice-chairman and managing director, says in the press release.
Insight
Tilt towards Alcan apparent
The Indal board's recommendation to shareholders to reject Sterlite's offer clearly suggests that it is more in favour of an association with Alcan than with Sterlite. Indal has been a professionally-run company, and therefore Sterlite cannot be expected to contribute anything significant managerially.
Besides, Alcan is in a position to bring far more to the table than Sterlite as far as technology and a global marketing-network are concerned.
However, it needs to be recognised that Sterlite's offer has made Alcan more committed to Indal's operations.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
