MUMBAI, AUG 8: A change of guards is likely to take place at the largest paint company in India. The managing director of Asian Paints, Atul Choksey today indicated that he would be stepping down from the company's board following sale of his 9.5 per cent stake in the company to foreign institutional investors (FIIs).

Ashwin Choksi - who belongs to one of the four promoter groups of the company - is likely to take over as the chairman of the Rs 937 crore company. This follows major difference of opinions among the Chokseys and the other three promoter families (the Danis, the Choksis and the Vakils) on the funding of the company's expansion plans. The plan of Choksey for a GDR issue was reportedly rejected by other promoters as it would have diluted their holdings.

``I will be here till a smooth transition is over .... I hope the new management would be able to deliver goods,'' Atul Choksey said. He was answering several shareholders' queries at the annual general meeting whether the speculation of his stepping down from the company was true.

However, Choksey confirmed reports that FIIs - Capital International and Morgan Stanley - are seeking to back out from their contract as they were unaware of the fact that 35 lakh shares were held by the Choksey family in the company. FIIs had earlier contracted to buy the shares thinking that the Chokseys would continue in the management of the company.

``However, things did not go as we planned. Both FIIs are now seeking to back out of the Rs 127 crore contract on having learnt that the shares belonged to us,'' he said. Choksey said they sold 9.5 per cent stake of the total equity of Rs 40 crore held by the family and it was divested as per the desire of his father. The sale of shares (9.5 per cent of the total equity of Rs 40 crore) held by the family was planned as per the desire of my father,'' Atul Choksey said.

High drama was witnessed at the AGM of shareholders when Ashwin Choksi, the second managing director of Asian Paints took over the chairman's seat. It may be recalled that Champaklal Choksey, one of the co-founder of the company and father of Atul Choksey expired on Thursday last. Shareholders demanded to know what were the real reasons behind the Chokseys selling off their stake.

Recalling the events leading to their exit, Atul Choksey said they contacted DSP Merril Lynch on July 30 to sell off their stake in the company.``We received many offers and a deal was stuck on Thursday at 3 pm. My father commented that he was extremely relieved and happy over the deal. Perhaps due to this joyous sentiment he died within hours of this decision,'' he said.

Earlier, addressing the AGM, Ashwin Choksi, (who is incidentally not related to Chokseys) said the company's board has authorised him to chair the meeting. Choksi said the company will continue to work as a team and absence of an individual would not hamper its future plans. ``It is sad that they (Chokseys) are leaving ... but I can assure you that the professional management would be able to give a proper direction to this company,'' he said.

He assured the shareholders that their investment in the company is safe and other promoters are committed to the company's growth. With Choksey's exit, the other three promoters would be left with 40-41 per cent of stake while the rest would be with FIIs.

Hectic parleys on to save deal

MUMBAI: DSP Merrill Lynch, which brokered the Asian Paints deal, and the representatives of both FIIs - Capital International and Morgan Stanley - held hectic parley on Friday to find a solution to the Chokseys' stake in the company.

According to a spokesperson of Morgan Stanley, the company as a policy does not talk on any individual deals, however insiders said that talks are currently underway to find an amicable solution. Atul Choksey said after the AGM that as for they are concerned the deal has been concluded.

The pay-in for the deal comes up on the NSE next week. If the two FIIs don't pay up, then DSP has to shell out Rs 127 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.