Role of FIs in Reliance-Grasim deal under the CBI scanner

Furthermore, these FIs also have board level representations in Reliance and the Aditya Birla group flagship, Grasim Industries. “CBI officials had visited our offices on a fact-finding mission on the L&T deal,” said a senior FI official. However, the FIs have preferred to distance themselves from the deal in which Grasim paid a huge premium of around 47 per cent over the then prevailing market price to corner 10 per cent of the bluechip company, which was also instrumental in paving the boardroom entry of Birlas in L&T. “We had explained to the CBI officials that the deal was purely an affair between Reliance and Grasim and we had no role to play,” said the FI official.

However, it could not be ascertained whether ‘any progress’ had been made by the CBI. “We have not heard from CBI after that,” commented the FI official.

The FIs have maintained that the entire deal was approved by all the boards concerned unanimously.

Eleven months after acquiring RIL’s 10.05 per cent stake in diversified conglomerate L&T, Grasim Industries finally announced an open offer for up to 20 per cent in L&T at a price of Rs 190 per share. Post the open offer, the total acquisition cost for the Rs 835.85-crore L&T will be about Rs 1,916 crore. The offer opens on December 9, 2002 and closes on January 7, 2003.

Grasim’s wholly-owned subsidiary, Samruddhi Swastik Trading and Investments Ltd, would be acting in concert for the open offer along with Grasim.

Though the market expected Grasim to make an open offer for L&T when the rumour was doing the rounds during July-August, Grasim had repeatedly denied any plans for an open offer, maintaining that it would continue to be a strategic investor.