MUMBAI, December 12: In a far-reaching move, the Securities and Exchange Board of India (SEBI) has rejected an application made by Nestle S A of Switzerland seeking exemption from making a public offer to acquire 3.62 per cent stake in Nestle India Ltd (NIL) from B M Khaitan group. Simultaneously, the multinational has been ordered to make an open offer to buy shares from other shareholders as well.

According to a SEBI statement, B M Khaitan group and NIL had set up Nutritional Food Products (India) Ltd (NFPIL), which was amalgamated with NIL and liquidated in March 1993. In terms of the exchange ratio, the B M Khaitan group was allocated 3.62 per cent of shares of NIL, which Nestle SA wanted to acquire.

The takeover panel of SEBI, revoked its first order after it was provided with additional facts and information about the agreement between NIL and B M Khaitan. SEBI referred the case back to the takeover panel for their re-consideration. In its final report, the panel felt in terms of the joint venture agreement, the B M Khaitan group can not be considered as a promoter of NIL as it was not obliged to sell its stake.

SEBI regulations stipulate - under regulation 11 of the takeover code - that any purchase beyond 51 per cent of the present holding should be in a transparent manner even though there was no change in the management.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.