In the letter of offer for its proposed Rs 189-crore rights issue, ACC has said: "The present promoter group of Tatas holds 14 per cent of the total equity capital of the company, making it the largest shareholder group in the company after the financial institutions."

This is a significant departure from what ACC had stated at the time of its last rights issue in January 1994. The cement maker had then claimed that it was a professionally managed company without a distinct promoter group and that "provisions regarding lock-in period for equity shares held by promoters do not apply".

Chairman emeritus Nani Palkhivala had also added to the controversy in December last by saying that ACC was not a Tata company "as of now", a statement that had caused the Tatas considerable embarrassment.

According to the Sebi takeoverguidelines, the term "promoter" means the person/persons who are in control of the company, or, persons who are named in any offer document as promoters.

The Tatas have several directors on the cement giant's board including Tata Sons director, finance, NA Soonawala, the present ACC chairman Pallonji S Mistry and vice-chairman S Ganguly, who also sits on the board of other Tata group majors.

Justifying its relationship with the "promoter" Tatas, ACC has said in its offer letter: "The company was formed more than 60 years ago, with the amalgamation of 10 cement companies belonging to the Tata, Khatau, FE Dinshaw and Killick Nixon groups.

"The Tatas have since inception contributed to the growth of the company through representation on the board of the company, the erstwhile managing agency board and the various executive committees of the company and some of the members of the board are also directors on other Tata companies."

In recent months, as part of the overall group recast, a business reviewcommittee has also been set up for ACC, like in other Tata companies, to chalk out and implement a growth path for the cement major. ACC is also likely to subscribe to the Tata Brand Equity Scheme next year, when more group companies are slated to sign up.

Senior ACC officials said that since the last rights issue, the Tata position in the company has gone through considerable change with the latter hiking its stake in the cement major through its investment companies.

"The term existing promoter group has been used as there has been a significant change in the holding pattern of the Tatas. While earlier it was fragmented, and held through several group companies, it has now been consolidated," they added.

The shareholding of the Tatas in ACC has risen sharply over the last few months with the group hiking its stake to 14 per cent till end-January from 11.2 per cent as on March 31, 1997.

In the current fiscal, ACC officials said, the Tatas have raised their holding further to 14.3 per cent throughmarket purchases. According to the offer document, the total rights entitlements of the Tatas work out to 47,81,978 shares and the group has expressed its intention to pick up their share of the rights offering.

The Tatas had recently proposed to infuse funds into ACC through a preferential allotment to fund the cement major's expansion plans, but the move was shot down by the financial institutions. Financial institutions are the largest stakeholders in ACC with a combined stake of 26.55 per cent.