Addressing the annual general meeting of Indal's shareholders on Thursday, chairman SM Datta said that Indal had a very limited role to play in the takeover bid as it was a "subject or a target company". The Indal management had suggested to the financial advisors of Alcan that they should negotiate with the Sebi to arrive at a marketable lot so that the interests of the smaller shareholders of the company are protected. The financial advisors of Alcan had then submitted a proposal to Sebi suggesting the best possible basis of acceptance of the shares in favour of Alcan. Out of seven crore shares of financialinstitutions and individuals in Indal, 1.4 crore are to be picked up by Alcan. On a pro-rata basis, the ratio works out to be approximately 2:5. The rest would be returned to the original shareholders.An additional 20 per cent stake would translate Alcan's shareholding to 54 per cent in Indal, which would now become a subsidiary of the Canadian aluminium major.

On the issue of whether Indal would lose its independence as a separate company, Datta said that it is difficult to ascertain whether there will be a complete change in the style of management henceforth, but past records have always shown closer interaction as far as technology is concerned rather than obtrusive interference.

Alcan had reduced its stake from an original 67.75 per cent to the present 34.62 per cent over the last 60 years. Its holding stayed at around 65 per cent till 1970. Thereafter, Alcan's equity diluted to 55.27 per cent in 1974, then to 50.5 in 1981-82 followed by a fourth dilution to 39 per cent.

The last dilution cameabout in 1994 when Alcan, on account of its own losses (the first ever in its history of operations), could not participate in the GDR issue of Indal. The latter needed equity to fund its expansions at the sheet mill in Belur and a power project at Hirakud in Orissa. As a result, the Alcan holding dropped to 34.62.

Our Banking bureau adds: It may be recalled that Alcan had staved off the much-publicised takeover bid mounted by Sterlite Industries by revising its open offer price to Rs 200 from Rs 175.

The bid for Indal had taken a fresh twist with Templeton's emerging markets chief Mark Mobius and some other investors -- who had offered their shares to Sterlite on the basis of the higher offer return -- complained to Sebi about the manner in which Alcan's revised deal was put through in the last minute without giving them an opportunity to sell their shares to the Canadian aluminium major.

However, Sebi, after taking into consideration the different clauses of the takeover code, has upheld Alcan's offerof Rs 200 a share.

"Going by the existing clauses of the takeover code, Alcan can very much change its offer price through a negotiated deal, and the new offer offer price has to be offered to all investors,'' a Sebi official said.

``We are aware of the inconvenience to the investors because of the last-minute negotiated deal, and will wait for justice Bhagwati panel's revised terms for the takeover code,'' he said.

The problem cropped up because the takeover code had two contradictory clauses. While one clause permits open-market purchases until the last date of an open offer, another allows no revision in the offer price during the last week of the offer period's closure.

According to sources, Sebi was considering to re-open the offers, which would have given investors a chance to tender their shares to either offerer.

Sebi was examining various other options and had sought legal opinion on the matter. The other two options were to annul both the offers and start from ground zero, and to notpermit Alcan to pay the revised price of Rs 200.

Alcan's lead manager JM Financial had, in a swift move, carried out an open-market purchase of 15,900 shares, representing 0.0224 per cent of Indal's equity of Rs 71.11 crore at Rs 200 a share. Domestic financial institutions took the bait, enabling Alcan to retain majority control in Indal.