Investors move Sebi against Birla Group’s offer for L&T

Angry investors have moved the Sebi against the open offer made by the Aditya Birla group to buy another 20 per cent holding in L&T. The open offer price announced by Birla flag ship Grasim Industries has shocked investors, who have termed the price of Rs 190 per share too low in a depressed stock market. Leading the tirade against Grasim from the front is Investor Grievances Forum (IGF). Criticising the lower price offered to other shareholders, IGF has moved the Sebi to stay the open offer citing the reason that the insider trading case against Reliance in the L&T deal with Grasim is still pending with the Sebi.

The Birla offer has come within 11 months after the group acquired Reliance Industries’ 10.05 per cent stake in L&T at a whopping premium of 47 per cent. In November last year, Grasim paid Rs 306.60 per share against the then prevailing price of 208.50. “If they can pay Rs 306 to Reliance, why can’t they offer the same price to small investors, who have been holding the stock for several years now. Other than saying that we are not going to participate in the open offer, financial institutions, which are the single largest stakeholders in the company, have not done anything,” thunders Kirit Somaiya, president of IGF.

IGF is also planning to move the Department of Company Affairs (DCA) and apprise the Ministry of Finance on the issue. “We had already met PP Vora, chairman of IDBI and officials in UTI on the issue. We will be meeting LIC officials soon,” says Somaiya. Among the major stakeholders in L&T are Life Insurance Corporation (17.42 per cent), Unit Trust of India (10.34 per cent), while foreign institutional investors hold 6.35 per cent as on September 30, 2002. Public holding in L&T is at 31.68 per cent while shares underlying GDR constitute 4.16 per cent. “On the one side, UTI has demanded a Rs 14,700 crore bailout from the Government. IDBI is waiting in the wings for a lifeline. But these institutions, which have representatives on both Grasim and L&T boards have failed to stop the cheap takeover,” said an investor. Another shareholder said Sebi should change the guidelines governing open offers to take over companies. “If the price at which the acquirer bought the promoter stake is higher, the acquirer should be asked to pay the same price in the open offer as well.”