MUMBAI, Mar 20: For want of sellouts, whopping profits were lost by shareholders who did not respond to the earlier open offers in the domestic capital market, the Sterlite Industries top brass has documented.Sterlite Industries, which is fighting a bruising battle with Canadian aluminium-major Alcan to pick up a 20 per cent stake in its Indian associate Indal, is making all out efforts to convince institutional shareholders not to let go this opportunity to sell their shareholding in favour of the highest bidder.
The Sterlite management has drawn up a list of cases where the FIs had suffered `opportunity losses' for failing to offload stakes in case of open-offers made in the past. The study compares the offer prices in the recent instances of open offers, and then tracks the current prices of the stocks concerned. In almost every case, declines by huge margins ranging from 13 per cent in the case of Tektronix India and 79 per cent in the case of Vikrant Tyres have been recorded.
The list has beenhanded to select major investors in Indal, including, it is believed, to institutional shareholders, to convince them that sellouts would be the very best option for them, because the tendency in the domestic market has invariably been for prices to decline after open offers.
For example, JK Tyres had made an open offer for Vikrant Tyres at Rs 76, but the price has since the closure of the offer declined to around Rs 16. In the case of Surat Electricity, the Torrent group had made an open offer at Rs 225, but the current price is ruling at no more than Rs 75, implying a huge 65 per cent drop in prices.
From the attempt to convince investors in this fashion on the need to cash in on gains to be made from high offer prices, it would appear that Sterlite Industries is banking on pricing as its most important bid weapon in picking up the 20 per cent stake in Indian Aluminium.
In fact, it has announced a revised bid price of Rs 115 per equity share. This beats out the value put on the company's share at Rs105 by the single-largest shareholder of the company for the last 60 years, Alcan Aluminium of Canada.
Sterlite will make a presentation next week to a joint committee formed by the institutions to deal with the Indal takeover bid issue, in which it will seek to present its case vis-a-vis that of Alcan.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
