MUMBAI, Aug 20: ICI plc had planned and initiated moves for buying Atul Choksey's stake in Asian Paints (India) Ltd even before the latter's earlier deal with two FIIs had been formally cancelled. The earlier deal had been brokered by DSP Merrill Lynch with Capital International and Morgan Stanley.

ICI plc advanced $35 million in loan funds to Kotak Mahindra Capital Company (KMCC), who eventually brokered the deal, around the middle of last week, much before Choksey and KMCC inked their agreement for the sale of Choksey's stake in Asian Paints. A top Reserve Bank official said that ICI plc's loan was cleared under the automatic route last week itself, which was also before the deal with DSP Merrill was officially called off on Thursday.

This suggests that Choksey could not have been totally unaware that ICI plc would be the eventual buyer of his stake. Industry sources say that it is very unlikely that Choksey would not have cared to ascertain from KMCC its capability to honour its commitment and the source of the funds, especially after the soured deal with DSP Merrill.

Industry sources also say that a conservative company like ICI plc would not have taken an investment decision, involving $35 million, without due deliberation. This would mean that ICI knew of the investment opportunity much before its actual investment at the start of this week.

The question then is: did Choksey know about ICI's impending involvement with Asian Paints even as he was unflinchingly assuring shareholders at the annual general meeting on August 8 that he would see that there was a smooth transition in the company management?

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.