Merchant bankers of both the bidders claim that minority shareholders, who hold less than 10 per cent of Indal's paid-up equity, have responded to their offers, but only in small numbers. None of them was willing to divulge the exact number of shareholders who have registered themselves.

While Sterlite has made an offer price of Rs 115 per share, Alcan enjoys a temporary price advantage with an offer of Rs 120 for 20 per cent of Indal's equity capital.

A majority of the shareholders are waiting for the offer prices to be hiked. The last date for either company to do so is May 25. Enam Financial chief Vallabh Bhansali, the merchant banker to Sterlite's offer, said that talks were on with financial institutions (FIs) to convince them to sell out to Sterlite. "The responsefrom the FIs is positive and we are exploring every possibility of revising our offer price upwards," he added.

Merchant bankers are also surprised at the initial response from the shareholders. One said: "Both Alcan and Sterlite expect the other to revise its bid price. It is surprising that some shareholders did not wait to see who offers them a higher price."

"Some shareholders have responded to the Sterlite offer, though the number is not earth-shaking. It amounts to less than 1 per cent of Indal's equity," says Bhansali.

Officials at JM Financial, the merchant banker to Alcan, said: "Though the shareholders who have responded to the Alcan offer number less than 1 per cent of Indal's equity, we expected lesser number of shareholders to respond at this early stage of the offer period." Both the Alcan and Sterlite offers will close on June 2.

Speculation is rife that Sterlite will make an higher offer price, while Alcan has stated that it has readied a war-chest of Rs 350 crore for hiking its stakein Indal from 34.62 per cent to 54.62 per cent.

This would mean that Alcan could effectively make an offer of about Rs 250 per share if need be, almost double its current offer price of Rs 120.Sterlite, on the other hand, has stated that it has not made any secondary- market purchases, though it is keen on a negotiated deal with any bulk shareholder.

The role played by the FIs is also crucial as they hold 36.06 per cent stake in Indal. Certain institutions are believed to be for a sellout to Sterlite only if it can fund a 51 per cent acquisition in Indal.

A 51 per cent holding in Indal by Sterlite would require it to buy the entire FI stake and another 15 per cent from the minority shareholders, an acquisition that will cost Sterlite about Rs 500 crore.

Unless it gets a majority stake in Indal, Sterlite can neither get management control (as Alcan already holds 34.62 per cent) nor can it press for any board representation to influence the company's functioning. This will only destabilise Indal,institutions feel.