The Hindu : SAT upholds SEBI advice on Grasim open offer

Online edition of India's National Newspaper
Friday, Nov 29, 2002

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Business

SAT upholds SEBI advice on Grasim open offer

By Our Staff Correspondent

MUMBAI NOV. 28. The Securities Appellate Tribunal (SAT) today upheld the Securities and Exchange Board of India (SEBI) stay on the A. V. Birla group company, Grasim Industries' open offer for Larsen & Toubro.

The SAT ruled today that Grasim, which is the country's third largest cement manufacturer, could not go ahead with a proposed open offer for acquiring a 20 per cent stake in the rival company, Larsen & Tourbo. The SAT had heard the case yesterday and postponed its order to today.

"In my view, granting an interim order as sought for by the Appellants (Grasim Industries), in the light of the facts of the case would tantamount to staying an investor protection measure put in operation by the Respondent (SEBI),'' said C. Achutan, presiding officer of the Tribunal, adding, that for reasons stated in the order, "I am not inclined to grant interim relief.''

Earlier this month, SEBI had asked Grasim, which holds a little over 15 per cent in L&T, to put on hold its offer, pending investigation into a possible violation of takeover rules. This followed complaints received by SEBI from investors regarding the price of the open offer.

The complaints referred to the lower price offered of Rs 190 per share to shareholders by Grasim while it had paid a price of Rs. 306.60 per share to Reliance Industries for acquiring a 10.05 per cent stake in L&T in November 2001.

Grasim, in all acquired a 14.48 per cent stake in L&T at Rs. 971 crores at an average acquisition cost of Rs. 271 per share. The 10.05 per cent stake was followed up with market purchases of another 4.42 per cent at an average price of Rs. 177 per share.

Mr. Achutan said, "In my view, the respondent (SEBI) has acted well within their powers in ordering an investigation. They had received complaints, even after the public announcement made on October 14. The complaints are under investigation. The respondent (SEBI), in the said context, in their best judgment, has directed the Appellant (Grasim) not to proceed further. There is not enough material before me to take a different view.''

During the day, L&T shares moved up by 1.74 per cent to Rs. 204.3 while Grasim's shares dipped by 2.1 per cent to Rs. 292.45 on the BSE.

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