However, the silver lining is that the companies are now allowed to fund their takeover bids through the issuance of preference shares which has been, belatedly, clarified by the SEBI in the case of Sterlite. "The takeover code is still not clear on many issues. It is left to interpretations as it happened in the case of Sterlite. SEBI's gave a green signal to the revised objective and funding of the open offer by Sterlite, which in future cases, would serve as a guideline," said a corporate lawyer.

Even in the case of liquor firm, Herbertsons, one of the promoters increased his stake to around 42 per cent taking advantage of various loopholes in SEBI takeover code. The SEBI is still examining whether the promoter should make anopen offer or not, say sources. On Monday, just a day before Sterlite's open offer closed, the SEBI had asked the company to get the permission from its lenders, both foreign and domestic and shareholders to get their nod to the issue. As the offer was closing next day, Sterlite had no choice but to surrender.

Corporate lawyers say that in the years to come Sterlite's failed attempt to takeover Indal will serve as a test case for future takeover battles. "With each takeover battle, we are learning something new," lawyers said. They suggest that SEBI should attempt to bring more clarity on the takeover code which still has many loopholes. "If SEBI gave its verdict on time. Their could have been different result of our takeover bid," said a Sterlite official. SEBI's faux pas was due to absence of all the top officials. Both the Chairman, D R Mehta and the executive director in-charge of takeover, O P Gehrotra were out on official tour. It was, thus, left to the junior officials and its legal department toclarify the objections in India's largest coporate acquisition drive. Alcan had objected to the cash and optional share offer made by Sterlite's final offer of Rs 221.

Though the SEBI agreed with Sterlite saying that the offer was valid, it added that Sterlite would have to obey the guidelines on preferential allotment of equity issued in 1994. Other objections raised by Alcan on whether the GDR holders of Indal would be able to participate in the open offer were not accepted by the SEBI.