Sterlite buys 55% in India Foils

The IFL statement said Williamson Magor group’s stake in India Foils would come down to about 27 per cent from 60 per cent after the issue of shares to the Sterlite group. “For the Sterlite group, the alliance results in strengthening its market position in the domestic high value-added foils segment which is growing at around10-12 percent,” said Anil Agarwal, chairman of Sterlite.

“The alliance was mainly because of the fact that the group had now decided to shift its business interest from aluminium foil production to tea and battery,” Deepak Khaitan of the Williamson Magor group said and suggested that the present arrangement was also in the best interests of financial institutions and the company shareholders.

Share prices of both the companies moved up on the stock market. IFL shares ended Rs 2.45 higher at Rs 33.45 at the Bombay Stock Exchange on Tuesday. Sterlite shares closed Rs 21.80 up at Rs 427.50.

IFL said Sterlite’s associate, Madras Aluminium Company Ltd, an integrated aluminium producer of about 30,000 tonnes per year will be an added strength as IFL buys about 15,000 tonnes of aluminium each year. A meeting of IFL shareholders will be held on December 31, 1999 for approval of the issue, as per the Securities & Exchange Board of India (SEBI) guidelines.

India Foils will use the issue proceeds to the tuneof nearly Rs 50 crore for augmenting the long term working capital, capital expenditure for increase of production, value addition and debt reduction.

No open offer by Sterlite

MUMBAI: Sterlite which acquired 55 per cent stake in India Foils has declined to make any open offer to buy shares from other shareholders under the takeover code. “This deal does not come under the takeover code of the SEBI. It’s only an alliance. India Foils is issuing preference shares to Sterlite. We’re getting 55 per cent in the expanded equity capital,” said a senior official of Sterlite.

Sterlite refused to term it as a “takeover” saying that the takeover code would have been applicable had it acquired the stake in the existing capital capital. However, analysts questioned the Sterlite contention and said the “alliance” is nothing but a takeover of India Foils. SEBI should ask Sterlite to make an open offer as Sterlite will be virtually running the company with a majority stake. “Maybe there is a loopholein the law. But in letter and spirit, it’s a takeover. It’s not understandable why it is avoiding the open offer,” said an analyst.