The HSBC Caps chief, (which is currently advising Indal on warding off a takeover threat from Sterlite), told The Financial Express that no amount of inbuilt defence mechanisms can be successful if the company in question does not have a good performance which is reflected in terms of high profits and sound market capitalisation.

"It is also important that this is communicated to shareholders so that they know exactly how the company is performing," said Browne.

"Even globally, the only way out for a company to survive a takeover is to perform so well that it makes it absolutely impossible for any company to take it over. If the stock is not doing well it shows that thecompany is not perceived to be doing well. While on the one hand, a low stock price and the resultant low market cap may be due to actual bad performance by a company, on the other it is possible that while the company has done well it has not communicated the same to shareholders," said Browne.

"Would any company be able to takeover HDFC. Definitely not, for the shareholders have faith in the management. Or can anyone even think of taking over the HSBC group which has over the years built up such a huge market capitalisation. This is the only defence mechanism. And this is what we have been telling companies," he added.

Browne agrees that there is no funding mechanism in India for a target company to fall back on when it faces a takeover, but adds that a good company would never require funds to thwart a takeover.

"If the management is sound then a company will not need to buy shares from its investors as they would simply not sell out if they have faith in the management. It all comes down to soundperformance and communication," said Browne.

Interestingly, FIIs had recently told a visiting delegation from Indal and its advisor HSBC Capital Markets that it expected better communication from the company in future.

And although Browne refused to comment on the specific case, sources said that Indal is considering to come out with a detailed letter to all its shareholders in the next few weeks outlining the performance of the company and its plans for the future.