FIs against Tata’s ACC plan

MUMBAI, DEC 10: The financial institutions have raised a banner of revolt against the Tata group's plan to raise its stake in cement majo...

MUMBAI, DEC 10: The financial institutions have raised a banner of revolt against the Tata group’s plan to raise its stake in cement major ACC through the preferential warrant route. IDBI, the largest development financial institution in the country, has come out strongly against the proposal, especially the pricing of the warrants to be issued to the Tatas.

“I do not think that the proposal of preference warrants to be issued to the Tatas will be cleared by the financial institutions,” said G P Gupta, chairman of IDBI, adding, “We do not think that the pricing of the warrants is correct.”

The Tatas were so far claiming that ACC is their "associate company" rather than a group company. ACC’s move has stunned the financial institutions and the small shareholders with the company’s scrip falling consistently on the stock exchanges.

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"It is the government which owns the major chunk of shares in the financial institutions which would be the ultimate loser," FI sources said. FIs, especially the UnitTrust of India, cannot take a hit in the ACC deal as it is already facing a bad situation with its US-64 scheme, IDBI sources add.

In order to pacify the shareholders, the board has also announced a rights issue of equity shares in the ratio of one for every four shares held at a price of Rs 55 per share, ie, at a premium of Rs 45 per share on the sub-divided share of the face value of Rs 10 each, the company said, adding that the right issue price represents a discount of around 35 per cent to the current market price of the company’s shares as quoted on the stock exchange.

The company has convened an extraordinary general meeting (EGM) on January 7 here to get the proposals approved by the shareholders. The EGM is likely to be a stormy affair following the IDBI decision to oppose the Tata plan.